Am I self-employed when using an umbrella company?

You are not self-employed when using an umbrella company; you become an employee of the umbrella company when you register for the service. As an umbrella company employee, you will benefit from employment rights similar to permanent employees.

Am I self-employed when using an umbrella company?

You are not self-employed when using an umbrella company; you become an employee of the company when you register. As an employee, you get access to employment rights like permanent employees. This includes statutory benefits like sick pay, maternity pay, and paternity pay.

As your employer, the umbrella company handles many administrative tasks, including payroll, invoicing and tax. They will ensure the correct Income Tax and National Insurance amount is deducted from your earnings and paid to HMRC, and the remaining amount is paid to you.

You will also have one employer for tax purposes – the umbrella company. This means you can accept multiple contracts with different end clients and benefit from continuity of employment. Continuity of employment is beneficial when applying for a mortgage or loan, as you can demonstrate income.

Benefits of using an umbrella company

Despite the fact you are not self-employed when using an umbrella company, there are still many benefits, such as:

• Inside IR35 and compliance with UK tax law – Umbrella companies offer a compliant way for contractors to get paid for inside IR35 assignments. Provided you use a compliant umbrella company, you’ll be taxed at source (PAYE) similarly to a permanent employee and will comply with IR35 legislation.
• Short-term contracts – Umbrella companies are a great way to get paid if you work on short-term assignments. You can use the umbrella company for as long or as little as you like, and registration can be completed in under 10 minutes.
• £25 million insurance cover – Compliant umbrella companies will offer a free, comprehensive insurance package as part of their service, including Public Liability Insurance, Professional Indemnity Insurance, and Employers’ Liability Insurance.
• No tie-in period – Umbrella companies are a great way to try out contract work as there is no tie-in period. You can use the company for any assignment, and they will only retain a margin for the weeks you work.
• Employee benefits – As an employee of an umbrella company, you’ll have access to employee benefits such as Sick Pay and Maternity/Paternity Pay.
• Low cost – Umbrella companies offer an affordable way to contract, as an umbrella margin is considerably less than a contractor accountant’s fees. When you use an umbrella company, you can expect to pay around £15 – £30 per week.
• Continuity of employment – Your umbrella company will remain your sole employer, and you can work for different end clients consecutively or concurrently.
• Minimal administration – There is very little ongoing administration; you only need to submit a timesheet to your end client/agency and your umbrella company (if required).
• Additional benefits – Some umbrella companies offer extra benefits such as a rewards service (Churchill Knight Rewards) or a salary sacrifice service.

Contact us today for a tailored take-home pay illustration

Even though you are not self-employed when using an umbrella company, they offer a complaint and straightforward way to get paid. Churchill Knight Umbrella is an FCSA-accredited and SafeRec-certified umbrella company, so you can get paid with complete peace of mind that your payroll will be processed compliantly and per UK tax law.

When you register with Churchill Knight Umbrella, you can benefit from Same Day Faster Payments, our state-of-the-art app, free insurance cover (worth £25 million), a dedicated Onboarding and Customer Service Team who are on hand to answer any questions you may have, Churchill Knight Rewards and a salary sacrifice service.

For a free, tailored take-home pay calculation, please call our Sales Consultants on 01707 871622. Alternatively, please complete our short form online to schedule a call for a time that suits you to discuss our umbrella service and the benefits of using an umbrella company.