Umbrella Company Fees: How Much Should You Pay?

How much should you pay in Umbrella Company fees?

Why do Umbrella Companies charge fees?

Every umbrella company offers the contractor a range of services and benefits and in return, charges the contractor a fee:

  • The umbrella company employs the contractor and puts them on their payroll. In turn, the company pays the contractor a regular salary and deducts their tax and National Insurance through the PAYE system. This means there is no need for the contractor to undertake often tricky tax calculations through self-assessment as a self-employed contractor would.
  • The umbrella company offers the contractor a range of statutory benefits, including sick pay, holiday pay, maternity or paternity leave, and a workplace Again, this is a major benefit for umbrella contractors, unlike self-employed contractors who would need to cover the costs out of their own pocket should they wish to take time off to go on holiday.
  • The umbrella company invoices the client on the contractor’s behalf, chasing any late payments.
  • The umbrella company provides the contractor with the basic level of insurance required to carry out the contract. This typically covers professional indemnity insurance, public liability insurance, and employer liability insurance as a minimum. Again, this is not the case for self-employed contractors who are responsible for covering these costs out of their own pocket.
  • Umbrella companies can also offer additional perks and benefits including same-day payments, additional levels of insurance cover, extra holiday pay, help with things like childcare credits, help with processing business expenses, and any other paperwork or admin tasks.

How much do Umbrella Companies charge?

Now you know why umbrella companies charge their fees, let’s get down to business and look at how much they charge. After all, this will come directly out of your pay cheque, meaning it’s important you get a fair deal.

Umbrella company fees vary from company to company but typically contractors can expect to pay upwards of £15 per week in umbrella fees.

This varies depending on the services and benefits offered by the umbrella company, however. Clearly, if you only require minimal services from the company you can expect to pay the lower amount. However, if you require a range of benefits and additional services you will pay higher umbrella company fees.

How are Umbrella Company fees charged?

Now you know how much you can expect to pay in umbrella company fees, let’s look at how fees are charged, as this can also have an impact on how much you will end up paying.

Umbrella fees can be charged as either fixed fees or percentage fees.

  • Fixed fees: like they sound, fixed fees are when an umbrella company charges the contractor a fixed fee, whether this is on a weekly or monthly basis. This is taken off the contractor’s income before it is processed for PAYE.
  • Percentage fees: here, on the other hand, the umbrella fee is worked out and charged as a percentage of the contractor’s invoice value. This is usually the worst option for contractors who can end up paying higher fees merely if their contractor rate increases whilst receiving the same level of service in return.

 

For this reason, most contractors prefer paying their fees as fixed fees as it means they won’t have to pay more if they begin to earn more.

Fees can also be charged as net fees or gross fees.

This can also have a big impact on how much you end up paying meaning it’s important to take into consideration when choosing which umbrella company to work with.

  • Gross fees: here, the contractor will be charged their fee before tax relief has been applied
  • Net fees: however, with net fees, the contractor will be charged the fee after tax relief has been charged

Are there any other Umbrella costs to take into consideration?

Umbrella companies may also charge the contractor additional costs which can have a direct impact on your pay.

Some extra costs to account for include:

  • Sign-up fees: some umbrella companies charge a one-off joining fee
  • Exit fees: likewise, umbrella companies can also charge a one-off fee for leaving the company
  • Charges for additional benefits or admin tasks: it’s important to look at whether the umbrella company charges extra costs for additional benefits like same-day payments or admin tasks such as processing expenses, as this can have a direct impact on how much you end up paying

For this reason, it is always important to take the time to understand what the umbrella company fee covers and whether you will incur any additional costs for extra services or benefits.

Find an Umbrella Company that’s the best fit for you

Now you know what to look out for when it comes to umbrella fees and how much you should be paying, the next step is to use Umbrella Supermarket’s contractor calculator to compare umbrella company fees.

Our umbrella calculator takes all the hard work out of comparing umbrella fees for you, showing you exactly how much you will pay in exchange for what services in an easy-to-view list.

Simply enter a few key details, such as your contractor day rate and preferences, and we will show you a list of the best-suited umbrella companies for you as well as how much you will pay in fees under each company.

To find out how we can help you today, why not try out our award-winning umbrella calculator for yourself?

Would you like more information on Umbrella Company Fees: How Much Should You Pay??

Explore More Resources

Using an Umbrella Calculator

The Pros of Using an Umbrella Calculator

There are many advantages to using an umbrella calculator for contractors.

Umbrella calculators allow you to quickly compare thousands of umbrella companies across the UK, offering a clear overview of what you will receive from the company, including everything from your take-home pay, what benefits you will receive, and what services the company will offer.

To help contractors find out more, Umbrella Supermarket outlines the main benefits to using an umbrella calculator in 2021.

umbrella vs limited

Umbrella vs Limited Company: What to know when making the move this new tax year

The 6th April 2021 marked significant changes to IR35 legislation which impacted thousands of self-employed, limited company contractors operating within the private sector.

In light of the changes that have now rolled out, many limited company contractors are understandably considering their options and thinking about making the move to umbrella this new tax year.

To help make the decision that little bit easier, in this guide Umbrella Supermarket outline what contractors need to know about making the move from limited company to umbrella in 2021, to help you get on the right track.

 

umbrella company vs paye

Umbrella Company vs PAYE: What should you choose?

Umbrella company vs PAYE is a question asked by thousands of contractors.

After all, it’s a big decision to make that will have a direct impact on your contracting career and day-to-day life, so it’s not one that should be taken lightly.

To help every contractor make the right decision for them, Umbrella Supermarket has put together this insightful guide outlining the key differences between umbrella and PAYE and the advantages and drawbacks of each.

avoid ir35

How can I avoid IR35?

As a contractor, you will most likely know about IR35 and upcoming reforms from April 2021.

These changes to IR35 legislation are set to badly impact many self-employed contractors in the private sector, so thousands are understandably worried. After all, getting caught out by IR35 can mean you end up paying more in tax than you need at the same level as an employee, without receiving the benefits of being employed, such as statutory rights.

umbrella vs limited

Pros and Cons of Limited vs. Umbrella

Big reforms to IR35 legislation are set to come into motion from 6th April 2021 which will impact the thousands of self-employed, private-sector contractors out there.

For this reason, many of the contractors that currently operate through a limited company will be considering the umbrella company route as an alternative.

If this is true for you, it’s important to do your research to find out whether limited company vs umbrella is the best option for you in 2021.

To help make the decision that little bit easier, in this guide Umbrella Supermarket outline the key differences between limited vs umbrella, so you can get on the right track.

2021 budget

What Does the 2021 Budget Mean for Contractors?

On 3rd March 2021 Chancellor Rishi Sunak unveiled his Budget in the House of Commons, outlining the government’s tax and spending plans for the year ahead.

Sunak announced a variety of measures he will put into place to help businesses and jobs that have suffered through the pandemic, as well as outlining a plan for the long-term recovery of the economy.

However, the question many contractors will be asking is how the Budget will impact the

umbrella company

5 Benefits to Working with an Umbrella Company

Contracting through an umbrella company has become an increasingly popular option for contractors across the UK in recent years. After all, it is a route that offers contractors a range of benefits over other paths such as working through PAYE or being self-employed.

 

 

ir35 reforms

Contractor’s Guide to IR35 in 2021

From April 6th 2021, reforms to IR35 legislation will come into force, impacting the lives of thousands of self-employed contractors.

Inevitably, contractors across the UK are concerned about upcoming reforms and how these will affect them. To help, in this guide, Umbrella Supermarket look at what these changes to IR35 entail and how they might impact you as a contractor in 2021.

 

compare umbrella company fees

How to Compare Umbrella Company Fees

If you are considering joining an umbrella company in 2021, or have been contracting through one for a while and want to ensure you are getting a good deal, it is important that you know how to compare umbrella company fees.

What you pay in income tax and National Insurance will be the same regardless of which umbrella company you choose, however the fees the umbrella company charges can make a big difference to your take home pay.

At Umbrella Supermarket, we know that every contractor wants to get a fair deal. To help, we explain how umbrella company fees work and how you can compare them to find the best deal.

job retention scheme

Job Retention Scheme for Contractors in 2021

The COVID-19 pandemic has impacted workers across the UK and contractors have been no exception.

Many of the 1.77 million independent contractors have either lost work altogether or have had contracts put temporarily on hold leaving them in a tricky position.

Fortunately, many of these contractors are eligible for the government’s Job Retention Scheme otherwise known as furlough, introduced to offer financial support for businesses and workers. This has been an essential source of income for many who have lost contract work as a result of the pandemic.

As we experience a third national lockdown, the furlough scheme has now been extended until the 30th April. So, if you find yourself out of contract work or have projects on hold, Umbrella Supermarket are here to explain what the Job Retention Scheme is, how it works and what this means for contractors.