How Much are Umbrella Company Costs?

Umbrella company costs: What you need to know

Why do umbrella companies charge a fee?

Before looking at how much you can expect to pay in umbrella costs, let’s first look at why umbrella companies charge a fee.

An umbrella company becomes the contractor’s employer, in turn giving them a range of benefits and services in exchange for a fee.

The kinds of services and benefits that umbrella companies offer include:

  • Paying the contractor a salary: as the contractor's employer, the umbrella company will pay the contractor a salary. They will also deduct the correct levels of tax and National Insurance from the contractor's salary, paying contributions to HMRC as they are owed. This means that the contractor needn't worry about troublesome tax calculations and filing for self-assessment as their tax obligations are taken care of by the umbrella company.
  • Taking on business tasks: unlike a limited company contractor, who not only has to focus on the contract work at hand, but also has to work on running their own business, an umbrella company will take care of the business side of things for contractors. The umbrella company takes on tasks including paperwork, admin, expense processing, invoicing and chasing payments.
  • Giving the contractor statutory rights: as the contractor’s employer, the umbrella company also covers the contractor with statutory rights. This includes holiday pay, sick pay, maternity/paternity pay and a workplace pension. So, if you fall ill unexpectedly, the umbrella company will organise statutory payment to the contractor, giving you some all-important peace of mind.
  • Covering the contractor with insurance: finally, the umbrella company also covers contractors with certain types of insurance, namely Employer’s Liability Insurance which is a legal requirement. On top of this, some will also offer other forms of insurance if required in the contract.

That is the range of services you can expect to receive from an umbrella company, so, how much will you pay in return for these?

How much are Umbrella Company costs?

The important thing to remember is that umbrella company fees will vary from company to company, however, they start from around the £25 – 30 figure each week.

If you use minimal services from an umbrella company, you can expect to pay the minimum fee. In contrast, a contractor that takes advantage of a range of additional services from the umbrella company will usually pay more for these.

As well as the amount you pay, it’s also important to understand how the umbrella company charges their fees, as this can also impact how much you end up paying.

How does an umbrella company charge its fees?

There are two main ways that the umbrella company can charge their fees, including:

  • As a fixed fee: this is a set fee taken from the contractor’s fee
  • As a percentage: this is when the fee is worked out as a percentage of the contractor’s earnings

Often, the percentage fee option can be worse for the contractor, meaning that if the contractor begins to earn more, they will pay more in fees to the company. Therefore, it's always important to look at how the umbrella company charges its fees.

Another thing to consider when comparing umbrella costs is whether the company charges their fees as net or gross fees.

  • Gross fees: when an umbrella company charges a gross fee, the contractor is charged the fee prior to tax relief being applied
  • Net fees: when an umbrella company charges net fees, however, the contractor is charged the fee one tax relief has been charged

Clearly, this can also have a significant impact on how much the contractor will pay in fees, so this is also important to look out for when comparing costs.

Are there any extra costs to take into consideration?

On top of the costs we have already outlined in this guide, umbrella companies can also charge some extra costs for particular services.

These include:

  • Charges for signing up: some umbrella companies will charge the contractor a one-off fee when they join the umbrella company. Although this is a one-off cost is important to look out to ensure you get a fair deal.
  • Charges for leaving the umbrella company: likewise, some umbrella companies will charge a fee when the contractor decides to leave the umbrella company.
  • Charges for admin tasks: it is also worth noting that some umbrella companies will charge extra for certain admin tasks, including things like processing same-day payments or expenses. If these are things that you will make regular use of then this is worth checking, as you might end up forking out a lot for these services.
  • Charges for insurance cover: finally, some umbrella companies can charge additional fees for extra levels of insurance cover. Although every umbrella company must legally provide Umbrella Companies Professional Liability and Professional Indemnity Insurance, some contractors will need additional cover depending on their contract, so if this is the case, it’s always important to check what the additional costs will be.

Next steps – find your perfect umbrella company

Now you know how umbrella companies charge their fees, how much you can expect to pay and what you will get in return, it’s time to take the next steps and find the perfect umbrella provider for you.

That's where Umbrella Supermarket comes into play. Our quick and easy-to-use umbrella company calculator makes finding the best umbrella company for you hassle-free. Just put in your details and we will show you a list of the best companies based on your needs. Ready to give it a go for yourself today?

Would you like more information on How Much are Umbrella Company Costs??

Explore More Resources

using an umbrella company

Beginner’s Guide to Using an Umbrella Company

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 and Umbrella

Guide to PAYE vs. Umbrella

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.

Holiday Pay for Umbrella Contractors

Complete Guide to Holiday Pay for Umbrella Contractors

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.

umbrella company

When Shouldn’t You Use an Umbrella Company?

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.


The truth about HMRC approved Umbrella Companies

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.

Choose Between PAYE or Umbrella

How to Choose Between PAYE or Umbrella

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.

date rates vs hourly rates

Should contractors choose hourly or daily rates?

There are many decisions a contractor must make in their career. One important one is whether to charge daily rates or hourly rates.

Each option has its own pros and cons and will have a different impact on contractors.

Therefore, it’s important that every contractor does their research to find out which option is best for them.

In this guide, Umbrella Supermarket looks at hourly rate vs daily rate and the benefits and drawbacks of each, to help every contractor find the best route forward for them.


public sector private sector contractors

How to choose between public sector vs. private sector for contractors

Every contractor must make the decision about whether to work in the public sector vs private sector.

Operating in the public or private sector can have a big impact on the contractor’s career, including on what types of contracts they will work on, who they will work with to whether they will fall under IR35.

This is especially true since changes to IR35 legislation were rolled out in April this year which have had a significant impact on private sector contractors.

If you are debating between contracting in the public sector vs private sector, Umbrella Supermarket are here to help. In this guide, we outline the key differences between the public and private sectors and what effects this will have on contractors.

contractor options

Complete Guide to Contractor Options

Contracting has become an increasingly popular way of working in recent years. If you have decided that the time is right to begin your contracting career, one of the first questions you will ask yourself is how you will operate.

How they operate is one of the main decisions contractors must take which will have a big impact on your day-to-day contracting life.

After all, there are a number of ways you can work, including through an umbrella company or by being self-employed.

In this guide we look at umbrella company contracting vs self-employed contracting and the main advantages and disadvantages of each, to help you make the right decision.


Statutory payments

Statutory payments for contractors explained

Contractors can choose to work on a self-employed basis through their own limited company, or through an umbrella company as an employee of the provider.

Thousands of contractors choose the umbrella route. After all, there is a range of benefits to operating under an umbrella company, including receiving statutory rights.

If you are considering becoming an umbrella contractor in 2021 and want to know more about statutory payments for umbrella contractors, Umbrella Supermarket has put together this handy guide outlining everything there is to know.

comparing umbrella companies

What To Look Out For When Comparing Umbrella Companies

Working through an umbrella company has become an increasingly popular option for contractors in the UK.

An umbrella company makes contracting easy and hassle-free for contractors, saving them headaches on everything from tax, payroll, insurance to dreaded IR35.

However, with are so many umbrella companies out there, choosing the perfect one for you is no easy task.

To help, Umbrella Supermarket have put together this handy on what to consider when comparing umbrella companies, so you can find the best one in 2021.

umbrella company

How Does an Umbrella Company Work?

In light of recent IR35 reforms that came into force in April 2021, many limited company contractors are now thinking about making the move to Umbrella.

However, understandably, many will want to know more about umbrella companies and how they work before taking the leap.

To help these contractors decide whether Umbrella is the best move for them, Umbrella Supermarket have put together this ultimate guide on everything there is to know about umbrella companies in 2021.