No.
Contractors and freelancers in the UK should never engage with an offshore intermediary (offshore umbrella company) to maximise pay. Doing so has plenty of risks, including the risk of an HMRC investigation and life-changing fine.
When using a compliant UK-based umbrella company, you become an employee of the umbrella. As a result, you will be paid in accordance with HMRC’s tax system – Pay As You Earn (PAYE). PAYE deductions include income tax, Employee’s National Insurance Contributions (NIC), student loan repayments and pension contributions. Umbrella employees will also be subject to employment costs – Employer’s National Insurance Contributions and the Apprenticeship Levy. These are deducted from the assignment rate which is inflated to ensure that you, the contractor, is not out of pocket. If you have any questions about the employment costs, please speak with your recruitment agency.
Offshore umbrella companies usually have one thing in common – they promote inflated take-home pay. However, to achieve this, they take advantage of tax loopholes or deliberately break these rules.
Non-compliant offshore umbrella companies often process payroll in unusual ways, including:
- Paying employees with a combination of minimum wage and loans.
- Paying employees with a combination of minimum wage and shares.
- Paying employees with a combination of minimum wage and credits.
Most, but not all offshore umbrella companies will advertise themselves by:
- Pretending they’re compliant.
- Suggesting they’re approved by the UK government (HMRC does not promote or approve any umbrella companies, but they do acknowledge how compliant umbrella companies operate).
- Implying they work with global corporations.
- Writing unethical and persuasive messages such as “you deserve more of your money”.
For more information, please read our short guide about how to spot a tax avoidance scheme.
Whatever happens, do not engage with an offshore umbrella company. As a worker in the UK, you are required to pay the correct taxes and NIC. By using a non-compliant umbrella company, you put yourself at great risk of an HMRC investigation and severe financial penalty.
The best way to ensure you do this is to use a compliant umbrella company with professional accreditation from the FCSA. You may also be interested in using a SafeRec Certified Umbrella Company because you can access an AI-powered payslip audit every time your umbrella company pays you. This audit will identify any malicious or unusual deductions – allowing you to be paid with complete peace of mind.
Churchill Knight Umbrella
Churchill Knight Umbrella is accredited by the FCSA and is a SafeRec Certified Umbrella Company. If you are looking for a new umbrella company you can trust, please complete the short form on this page or call our friendly sales professionals at 01707 871622 to request a free, tailored take-home pay calculation.
Check out our newest articles
3 December 2024
Economic Review November 2024
Interested in keeping up to date with the latest economic performance information impacting businesses and…
14 November 2024
How will the rise in Employer’s National Insurance impact umbrella company employees’ take-home pay?
Chancellor Rachel Reeves announced in the Budget 2024 (Wednesday 30th October 2024) that the Employer’s…
7 November 2024
Churchill Knight Group enters exciting new chapter after acquisition
The Churchill Knight Group has been acquired by Magi GJJ – a group of business professionals with extensive…
31 October 2024
Budget 2024: The implications for recruitment agencies and their candidates using umbrella companies
The long-awaited Budget 2024 was delivered by Labour Chancellor Rachel Reeve in parliament on Wednesday, 30th…
31 October 2024
How will the increase in Employer’s National Insurance impact recruitment agencies and umbrella company employees?
On Wednesday, 30th October 2024, Chancellor Rachel Reeves delivered the first Labour Budget in over 14 years.…
30 October 2024
What were the key announcements in the Autumn Budget 2024?
Today (30th October 2024), the Chancellor of the Exchequer, Rachel Reeves, presented Labour’s first Budget in…
22 October 2024
Is it possible for an umbrella company to prove it operates compliantly?
In such a crowded marketplace, umbrella companies must stand out from the competition, but how? Sarah…
8 October 2024
What are the benefits of pension salary sacrifice?
As part of a pension salary sacrifice arrangement, you agree to give up a percentage or fixed amount of your…
2 October 2024
Economic Review September 2024
Our latest article provides an economic review of September 2024. It explores key areas such as the growth of…