Every UK employee is legally required to enroll their employees onto a workplace pension scheme. This means that employees can save for their retirement.
The schemes work by taking a percentage of an employee's pay and putting it into a pension pot.
All employers must automatically enroll their staff onto a workplace pension scheme if they meet the following criteria:
Therefore, as an umbrella company contractor, if the above applies to you then you will qualify for a workplace pension.
When you start working with the umbrella company, they will auto-enroll you onto a pension scheme.
Once you have been enrolled, you will be sent relevant information relating to the pension scheme such as who the pension is with and other key information.
The umbrella company payslip you will receive will also outline how much you pay in pension contributions so you always know how much you are paying in.
Typically, umbrella company employees pay a contribution of 5% of their salary and the umbrella company will pay the employer's contribution of 3%.
Although it is compulsory that the contractor is enrolled onto the scheme, if a contractor wishes to opt out of the pension scheme then they can do this by contacting the pension provider directly. It is worth noting that contractors have to pay the first month of pension contributions, after which they can leave at any time.
If you do decide to opt out, but then wish to re-join the scheme in the future you can choose to do so at any time.
Some umbrella companies allow salary sacrifice pension contributions which is a way for contractors to contribute more to their pension in a tax-efficient way.
This allows contractors to voluntarily give up a part of their salary which is instead paid into their pension. As the money you are putting into your pension is deducted before tax is applied, the contractor will pay less in tax and National Insurance contributions.
Yes – the lifetime allowance refers to the maximum amount someone can save up during the lifetime before a tax charge is applied.
For the tax year 2021 – 2022 the lifetime allowance stands at £1,073,100.
As well as a lifetime allowance, there is also an annual allowance of how much you can accrue each year.
For the current tax year, the current annual allowance is £40,000 which includes both your own and employer’s contributions.
Once contractors reach the age of 55 they will be able to access their pension pot. This age is set to increase to 58 in 2028.
Currently, at age 55 contractors can take up to 25% of their workplace pension fund tax-free.
If you take out more funds and go over the 25% threshold then this will be treated as taxable income.
There are many benefits to taking advantage of your umbrella company pension scheme.
Firstly, everything that goes in to your pension pot is being saved for the future, meaning you can have a comfortable retirement when the time comes.
What’s more, there are benefits to paying your pension contributions through the umbrella company rather than directly out of your bank account.
This is because of the salary sacrifice scheme we have already touched, which can lead to tax savings for umbrella company contractors.
After all, a contractor’s pension contributions are taken before tax and National Insurance are calculated, meaning you will get tax relief on your pension payments.
As well as paying into the pension scheme they are enrolled into, umbrella company contractors are also free to pay into any private pensions schemes if they choose. They can do this instead or as well as paying into the umbrella company pension scheme.
Finally, umbrella company contractors benefit from receiving umbrella employer contributions of 3% too.
Limited company contractors, on the other hand, will not receive employer pension contributions, meaning they have to take their pension contributions directly out of their fee. What's more, they are not auto-enrolled on a pension scheme. For this reason, many of these contractors forget or don't find the time to set themselves up with a pension scheme. Finally, these contractors can't take advantage of the salary sacrifice scheme and subsequent tax relief.
As well as receiving an umbrella company pension, there are also many other benefits to working through an umbrella company. Umbrella company contractors receive a salary, their tax and National Insurance contributions are calculated for them and taken off their pay, they qualify for statutory rights such as holiday and sick pay, they are covered with the correct levels of contractor insurance and the umbrella company takes care of all their admin and paperwork for them.
If, like many other contractors across the country, you have decided that going umbrella is the best move for you, the next step is to find the best provider for your needs.
Thankfully, Umbrella Supermarket make this quick and easy to do.
Simply head over to our umbrella company calculator, enter a few key details and hit go. In just 60 seconds we will generate a list of the best-suited umbrella companies for your needs.
To give it a go for yourself today head over to our contractor calculator to take the next steps in your contracting career.
Any contractor considering switching to an umbrella company will want to know how to find the best provider to work with.
Although you could spend your precious time and energy searching the web for the best umbrella company, there is an easier way – using an umbrella calculator.
In this guide, Umbrella Supermarket explains why every contractor should use an umbrella calculator in 2021.
If you are considering contracting you will need to decide on PAYE or umbrella.
It can be a difficult decision to make and contractors will inevitably be questioning which option will be the best for them.
To help every contractor get on the right track for them, in this guide Umbrella Supermarket looks at PAYE vs umbrella, outlining the key differences and how this will impact you.
There are many reasons that contractors across the UK opt to work under an umbrella company.
Umbrella companies offer an easy way to contract and remove the need for the contractors to worry about the burdens of admin, finances, tax and IR35, all things that limited company contractors have to deal with.
For this reason, many contractors will be weighing up their options and questioning whether it is worth using an umbrella company in 2021. To help make the decision that little bit easier, Umbrella Supermarket has put together this guide on the pros and cons of using an umbrella company.
Any contractor that is considering operating through an umbrella company in 2021 will need to understand Umbrella Company fees - from why an umbrella company charges fees, how they are paid to how much the contractor will pay.
In this guide, Umbrella Supermarket answers those all-important questions to help every contractor know exactly where they stand when it comes to umbrella company fees.
If you’ve made the decision to contract through an umbrella company in 2021, you will next need to find an umbrella company that’s right for you.
After all, there are lots of umbrella companies out there, so how do you know which one to choose?
To help you find the best umbrella company for you, in this guide Umbrella Supermarket outlines what makes a good umbrella company, so you can rest assured you’re making the right move.
If you are considering contracting through an umbrella company you will naturally have questions and queries over how they work.
After all, making the move to umbrella can be a big step for contractors. To help, in this guide Umbrella Supermarket explains how to get started with an umbrella company and share our top tips for using one in 2021.
PAYE or umbrella is a question asked by every contractor. Which one you opt for will have a big impact on your contracting career and lifestyle. So, it's important to make the right decision for you.
To help makes things a little bit easier, Umbrella Supermarket has put together this guide on PAYE or umbrella, outlining the key differences between each, to help you make the best and most informed decision for you.
One of the many benefits to working through an umbrella company is that you will receive holiday pay as well as a range of other statutory benefits including sick pay, maternity and paternity pay.
To find out more about umbrella company holiday pay, and how to calculate how much you will be entitled to, Umbrella Supermarket has put together this handy guide.
Contractors must make several decisions throughout their contracting careers. One big decision contractors have to make is how they will operate.
One way that contractors can work is through an umbrella company.
Umbrella companies have become an increasingly popular way to contract in the past few years, offering many benefits to the contractor. But, how do you know whether this option is right for you?
To help every contractor make the right decision for them, in this guide, Umbrella Supermarket explains when not to use an umbrella company.
There are tons of benefits to using an umbrella company, which is why they have become such a popular option for contractors in recent years.
After all, an umbrella company takes away the stress and hassle of operating through a limited company whilst offering contractors a range of advantages, such as statutory rights, paying them a salary, deducting correct tax levels and National Insurance, and taking care of tasks like expense processing and invoicing.
However, as more and more contractors opt to use the services of an umbrella company, more providers have started to claim that they are HMRC approved.
To bust the myths around HMRC approved umbrella companies and get straight to the facts, in today's guide Umbrella Supermarket look at whether HMRC approved umbrella companies really exist, so you know exactly where you stand.
If you're considering making the leap to contracting, you will understandably want to know how much you will have to pay in umbrella company costs. After all, this amount comes directly out of the contractor’s pocket, so it’s important to be clued up on how much you should expect to pay.
To help contractors, in this guide Umbrella Supermarket answer the all-important question of how umbrella companies cost in 2021.
Every contractor faces the decision between PAYE or umbrella, but how do you know which is the best option for you?
After all, PAYE and umbrella both have key differences, meaning contractors should do their research to find the best path for them.
Thankfully, Umbrella Supermarket is here to help. In this guide, we take a look at PAYE vs. umbrella, explaining what you should know before making the all-important decision.
