Operating through an umbrella company is a popular route taken by thousands of contractors in the UK. Offering an easy, hassle-free way to contract.

However, with more and more contractors opting to work through umbrella companies, more and more umbrella companies have crept up as a result. Each claiming to be the best in the UK.

Although it’s great to have choice, this can make it hard for contractors to cut through the noise and find the best umbrella company for their personal needs. Varying in fees, terms, benefits and services, there’s a lot to consider when it comes to choosing an umbrella company.

To help, Umbrella Broker have put together this handy, objective guide to help contractors find the best company to fit their needs in the most efficient and hassle-free way.

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What are the benefits of using an umbrella company?

Unlike limited company contractors who operate through their own company, contractors that choose the umbrella route in turn become an employee of their chosen firm.

Through the umbrella company, the contractor receives full statutory rights. This includes maternity or paternity leave, sick pay and holiday pay, has all their tax responsibilities taken care of and does not face the paperwork or admin involved in running their own business.

Umbrella companies also cover contractors under Umbrella Companies Professional Liability & Professional Indemnity Insurance, meaning their compulsory Insurance requirements are taken care of.

In exchange for these benefits, contractors will pay the umbrella company a fee.

Although many contractors choose an umbrella company to take the hassle out of contracting, it is important that they choose a company that is the best fit for them. After all, every contractor’s needs are different. Perhaps your focus is on finding the cheapest option, or you are seeking a company that can help with the likes of child credits.

Whatever your priorities, it’s important to research and compare companies to find a trust-worthy, reputable umbrella company that’s the best fit for you.

What to consider when finding the best umbrella company

The first step should always be to use an umbrella company comparison tool which will help you filter down and find umbrella companies suited to your personal preferences.

Comparing online using our quick and easy comparison tool, you can receive instant results, displaying your net take home pay, range of benefits open to you and the taxes you will pay. We will generate a list of trusted umbrella companies that best suit your needs, meaning you can begin to find the best one for you.

Now, you can compare your results, looking at the following key considerations:

Service fees

Umbrella companies either charge a flat-rate fee or a percentage fee. A flat-rate fee is a set amount, typically taken weekly or monthly. A percentage fee is when the umbrella company charges a higher fee if your earnings increase. Most contractors find the former option preferable, so it’s important to look out for this when choosing a company to ensure they fit with your needs.


In effect, the umbrella company is your employer, meaning they are required to have employer’s liability insurance. This protects you should you fall ill or become injured on the job.

Many umbrella companies also offer professional indemnity and public liability insurance which, although not legal requirements, are usually a requirement of the contract.

As certain contracts require specific kinds of insurance, it’s important to check whether your chosen umbrella company provides them. This is especially true if you work in a niche sector and need specific types of insurance.

Payment terms

Finding out when and how often the umbrella company will pay you is key, after all, we all want to get paid for the work we do.

The first step is to check whether you will be paid weekly, fortnightly or monthly, finding an option that best suits your lifestyle.

Likewise, check that it is easy to get paid on time. The last thing a contractor wants is to face difficulties to submitting their timesheets. Look out for signs such as whether a timesheet must go through an approval process before being paid. Factors such as this can act as a bottleneck and delay payment.

Red flags every contractor should avoid when it comes to payment terms are umbrella companies that say they will pay you only once they’re paid. Remember, this is not a fair or standard employee-employer relationship.

Finally, look out for how you will get paid. Working through an umbrella company means you should receive 100% of your income through PAYE. After all, some umbrella companies can try and entice contractors with false offers of a more tax-efficient payment structure. Look out for companies that offer to split your salary into two or more payments with only one going through the PAYE system, or who make payments through an offshore structure.

This is considered tax avoidance and puts you at risk as ultimately it is you who is responsible for your own tax affairs.

Pension schemes

Just as with any other employer, an umbrella company is required to enrol contractors onto a pension scheme if they earn more than £10,000 per year, work in the UK and are between age 22 and the state pension age.

Look out for the company’s pension scheme terms and see if which best fits your personal preferences. After all, some companies offer better terms than others.

Other fees to consider

It’s important to note that some umbrella companies will charge additional fees on top of their fixed or set fee.

Contractors should look out for:

  • Sign-up fees
  • Exit fees
  • Extra fees for insurance
  • Fees for processing expenses
  • Extra admin fees

Company reputation

As we’ve mentioned, not all umbrella companies are created equal. While most umbrella companies are trustworthy, some aren’t.

It’s always worth digging a little deeper to find out more about the company. A quick Google search will help you find company reviews to help inform your decision. You will also find key information such as how long the company have been operating, how many contractors they work with and their credit rating.

It is also worth checking whether the company is registered with the Freelancer and Contractor Services Association, meaning their operations, policies and processes meet strict standards.

Compare the best umbrella companies with umbrella broker

Umbrella Broker’s easy to use umbrella company calculator helps every contractor calculate their take home pay and find the best umbrella company to suit their needs. Taking just 2 minutes to input your details, our comparison tool generates a list of the best suited umbrella companies, so you can make a well-informed, educated decision.

We only work with the industry’ best umbrella companies to ensure every contractor gets the best service, the best prices and the best umbrella company to meet their personal needs.

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