Contractors who are looking for a quick payroll set up and minimal administration often decide to get paid using an umbrella company. This is a simple method to receive payments from your client. If you decide to join an umbrella company, you will officially become their employee. The umbrella company is responsible for invoicing your client and making sure that you receive your salary after deductions for tax, National Insurance and the umbrella’s margin.
Using an umbrella company is suitable for any contractor. However, umbrella companies are typically used by first time contractors, contractors on a short term assignment, contractors working in the public sector and contractors who do not want their own limited company.
Using an umbrella company is not the best option if you are entirely focused on maximising your take home pay. Because you will become an employee of the umbrella company, you will be paid PAYE as if you were in permanent employment. This will remove a lot of the benefits that contractors look for when they choose to become self-employed, including receiving dividends and company loans.
Contracting through an umbrella company in a nutshell:
- Quick set up
- No joining or leaving fees
- Minimal administration
- Salary paid via PAYE by the umbrella company
- Lower take home pay than contracting through a limited company
Churchill Knight Umbrella is the perfect PAYE payroll solution for contractors who do not want to set up their own limited company. We’ll make your life easier by taking care of a majority of your administration, as well as paying your tax and NIC on your behalf.