Privacy Policy

Umbrella Broker (a trading name of Report Central Limited) respects your privacy and is committed to protecting your personal data. This privacy notice will inform you as to how we look after your personal data when you visit our website (regardless of where you visit it from) and tell you about your privacy rights and how the law protects you.

1. Important information and who we are

Purpose of this privacy notice

This privacy notice aims to give you information on how Report Central collects and processes your personal data through your use of this website, including any data you may provide through this website when you sign up to our newsletter, use our services or take part in a competition.

This website is not intended for children and we do not knowingly collect data relating to children.

It is important that you read this privacy notice together with any other privacy notice or fair processing notice we may provide on specific occasions when we are collecting or processing personal data about you so that you are fully aware of how and why we are using your data. This privacy notice supplements the other notices and is not intended to override them.

Controller

Report Central Limited is the controller and responsible for your personal data (referred to as Report Central, “we”, “us” or “our” in this privacy notice).

We have appointed a data protection officer (DPO) who is responsible for overseeing questions in relation to this privacy notice. If you have any questions about this privacy notice, including any requests to exercise your legal rights, please contact the DPO using the details set out below.

Contact details

Full name of legal entity: Report Central Limited

Email address of DPO: applications@umbrellabroker.com

You have the right to make a complaint at any time to the Isle of Man Information Commissioner’s Office https://www.inforights.im/contact-us (ICO), the IOM supervisory authority for data protection issues. We would, however, appreciate the chance to deal with your concerns before you approach the ICO so please contact us in the first instance.

Changes to the privacy notice and your duty to inform us of changes

This version was last updated on 2nd May 2018

The data protection law in the IOM will change on 25 May 2018. Although this privacy notice sets out most of your rights under the new laws, we may not yet be able to respond to some of your requests (for example, a request for the transfer of your personal data) until May 2018 as we are still working towards getting our systems ready for some of these changes.

It is important that the personal data we hold about you is accurate and current. Please keep us informed if your personal data changes during your relationship with us.

2. The data we collect about you

Personal data, or personal information, means any information about an individual from which that person can be identified. It does not include data where the identity has been removed (anonymous data).

We may collect, use, store and transfer different kinds of personal data about you which we have grouped together follows:

– Identity Data includes first name, maiden name, last name, username or similar identifier, marital status, title, date of birth and gender.

– Contact Data includes address, email address and telephone numbers.

– Technical Data includes internet protocol (IP) address, your login data, browser type and version, time zone setting and location, browser plug-in types and versions, operating system and platform and other technology on the devices you use to access this website.

– Profile Data includes your feedback and survey responses.

– Usage Data includes information about how you use our website, products and services.

– Marketing and Communications Data includes your preferences in receiving marketing from us and our third parties and your communication preferences.

We also collect, use and share Aggregated Data such as statistical or demographic data for any purpose. Aggregated Data may be derived from your personal data but is not considered personal data in law as this data does not directly or indirectly reveal your identity. For example, we may aggregate your Usage Data to calculate the percentage of users accessing a specific website feature. However, if we combine or connect Aggregated Data with your personal data so that it can directly or indirectly identify you, we treat the combined data as personal data which will be used in accordance with this privacy notice.

We do not collect any Special Categories of Personal Data about you (this includes details about your race or ethnicity, religious or philosophical beliefs, sex life, sexual orientation, political opinions, trade union membership, information about your health and genetic and biometric data).

If you fail to provide personal data

Where we need to collect personal data by law, or under the terms of a contract we have with you and you fail to provide that data when requested, we may not be able to perform the contract we have or are trying to enter into with you. In this case, we may have to cancel the service you have with us but we will notify you if this is the case at the time.

3. How is your personal data collected?

We use different methods to collect data from and about you including through:

Direct interactions. You may give us your Identity, Contact and Financial Data by filling in forms or by corresponding with us by post, phone, email or otherwise. This includes personal data you provide when you:

– apply for services;

– subscribe to our service or publications;

– request marketing to be sent to you;

– enter a competition, promotion or survey; or

– give us some feedback.

Automated technologies or interactions. As you interact with our website, we may automatically collect Technical Data about your equipment, browsing actions and patterns. We collect this personal data by using cookies, [server logs] and other similar technologies. We may also receive Technical Data about you if you visit other websites employing our cookies.] Please see our cookie policy for further details.

Third parties or publicly available sources. We may receive personal data about you from various third parties and public sources as set out below:
Technical Data from the following parties:

– analytics providers [such as Google based outside the EU]; and
– search information providers based inside or outside the EU].

4. How we use your personal data

We will only use your personal data when the law allows us to. Most commonly, we will use your personal data in the following circumstances:

– Where we need to in order to assist you with your pre-contractual interests.
– Where it is necessary for our legitimate interests (or those of a third party) and your interests and fundamental rights do not override those interests.
– Where we need to comply with a legal or regulatory obligation.

Generally we do not rely on consent as a legal basis for processing your personal data other than in relation to sending third party direct marketing communications to you via email or text message. You have the right to withdraw consent to marketing at any time by contacting us.

Purposes for which we will use your personal data

We have set out below, in a table format, a description of all the ways we plan to use your personal data, and which of the legal bases we rely on to do so. We have also identified what our legitimate interests are where appropriate.

Note that we may process your personal data for more than one lawful ground depending on the specific purpose for which we are using your data. Please contact us if you need details about the specific legal ground we are relying on to process your personal data where more than one ground has been set out in the table below.

Purpose/ActivityType of dataLawful basis for processing including basis of legitimate interest
To register you as a new customer
  1. Identity
  2. Contact
Performance of a contract with you
To manage our relationship with you which will include:

  1. Notifying you about changes to our terms or privacy policy
  2. Asking you to leave a review or take a survey
  1. Identity
  2. Contact
  3. Profile
  4. Marketing and Communications
  1. Performance of a contract with you
  2. Necessary to comply with a legal obligation
  3. Necessary for our legitimate interests (to keep our records updated and to study how customers use our products/services)
To enable you to partake in a prize draw, competition or complete a survey
  1. Identity
  2. Contact
  3. Profile
  4. Usage
  5. Marketing and Communications
  1. Performance of a contract with you
  2. Necessary for our legitimate interests (to study how customers use our products/services, to develop them and grow our business)
To administer and protect our business and this website (including troubleshooting, data analysis, testing, system maintenance, support, reporting and hosting of data)
  1. Identity
  2. Contact
  3. Technical
  1. Necessary for our legitimate interests (for running our business, provision of administration and IT services, network security, to prevent fraud and in the context of a business reorganisation or group restructuring exercise)
  2. Necessary to comply with a legal obligation
To deliver relevant website content and advertisements to you and measure or understand the effectiveness of the advertising we serve to you
  1. Identity
  2. Contact
  3. Profile
  4. Usage
  5. Marketing and Communications
  6. Technical
Necessary for our legitimate interests (to study how customers use our products/services, to develop them, to grow our business and to inform our marketing strategy)
To use data analytics to improve our website, products/services, marketing, customer relationships and experiences
  1. Technical
  2. Usage
Necessary for our legitimate interests (to define types of customers for our products and services, to keep our website updated and relevant, to develop our business and to inform our marketing strategy)
To make suggestions and recommendations to you about goods or services that may be of interest to you
  1. Identity
  2. Contact
  3. Technical
  4. Usage
  5. Profile
Necessary for our legitimate interests (to develop our products/services and grow our business)

Marketing

We strive to provide you with choices regarding certain personal data uses, particularly around marketing and advertising.

Promotional offers from us

We may use your Identity, Contact, Technical, Usage and Profile Data to form a view on what we think you may want or need, or what may be of interest to you. This is how we decide which products, services and offers may be relevant for you (we call this marketing).

You will receive marketing communications from us if you have requested information from us or purchased goods or services from us or if you provided us with your details when you entered a competition or registered for a promotion and, in each case, you have not opted out of receiving that marketing.

Third-party marketing

We will get your express opt-in consent before we share your personal data with any company for marketing purposes.

Opting out

You can ask us or third parties to stop sending you marketing messages by following the opt-out links on any marketing message sent to you or by contacting us at any time.

Where you opt out of receiving these marketing messages, this will not apply to personal data provided to us as a result of a service provision.

Cookies

You can set your browser to refuse all or some browser cookies, or to alert you when websites set or access cookies. If you disable or refuse cookies, please note that some parts of this website may become inaccessible or not function properly. For more information about the cookies we use, please see here.

Change of purpose

We will only use your personal data for the purposes for which we collected it, unless we reasonably consider that we need to use it for another reason and that reason is compatible with the original purpose. If you wish to get an explanation as to how the processing for the new purpose is compatible with the original purpose, please contact us.

If we need to use your personal data for an unrelated purpose, we will notify you and we will explain the legal basis which allows us to do so.

Please note that we may process your personal data without your knowledge or consent, in compliance with the above rules, where this is required or permitted by law.

5. Disclosures of your personal data

We may have to share your personal data with the parties set out below for the purposes set out in the table in paragraph 4 above.

External Third Parties as set out in the Glossary.

Third parties to whom we may choose to sell, transfer, or merge parts of our business or our assets. Alternatively, we may seek to acquire other businesses or merge with them. If a change happens to our business, then the new owners may use your personal data in the same way as set out in this privacy notice.

We require all third parties to respect the security of your personal data and to treat it in accordance with the law. We do not allow our third-party service providers to use your personal data for their own purposes and only permit them to process your personal data for specified purposes and in accordance with our instructions.

6. International transfers

We may transfer your data outside the European Economic Area (EEA).

Whenever we transfer your personal data out of the EEA, we ensure a similar degree of protection is afforded to it by ensuring at least one of the following safeguards is implemented:

We will only transfer your personal data to countries that have been deemed to provide an adequate level of protection for personal data by the European Commission. For further details, see European Commission: Adequacy of the protection of personal data in non-EU countries.

Where we use certain service providers, we may use specific contracts approved by the European Commission which give personal data the same protection it has in Europe. For further details, see European Commission: Model contracts for the transfer of personal data to third countries.

Please contact us if you want further information on the specific mechanism used by us when transferring your personal data out of the EEA.

7. Data security

We have put in place appropriate security measures to prevent your personal data from being accidentally lost, used or accessed in an unauthorised way, altered or disclosed. In addition, we limit access to your personal data to those employees, agents, contractors and other third parties who have a business need to know. They will only process your personal data on our instructions and they are subject to a duty of confidentiality.

We have put in place procedures to deal with any suspected personal data breach and will notify you and any applicable regulator of a breach where we are legally required to do so.

8. Data retention

How long will you use my personal data for?

We will only retain your personal data for as long as necessary to fulfil the purposes we collected it for, including for the purposes of satisfying any legal, accounting, or reporting requirements.

To determine the appropriate retention period for personal data, we consider the amount, nature, and sensitivity of the personal data, the potential risk of harm from unauthorised use or disclosure of your personal data, the purposes for which we process your personal data and whether we can achieve those purposes through other means, and the applicable legal requirements.

In some circumstances we may anonymise your personal data (so that it can no longer be associated with you) for research or statistical purposes in which case we may use this information indefinitely without further notice to you.

9. Your legal rights

Under certain circumstances, you have rights under data protection laws in relation to your personal data. If you wish to exercise any of the rights set out at the end of this Policy, please contact the applications@umbrellabroker.com

No fee usually required

You will not have to pay a fee to access your personal data (or to exercise any of the other rights). However, we may charge a reasonable fee if your request is clearly unfounded, repetitive or excessive. Alternatively, we may refuse to comply with your request in these circumstances.

What we may need from you

We may need to request specific information from you to help us confirm your identity and ensure your right to access your personal data (or to exercise any of your other rights). This is a security measure to ensure that personal data is not disclosed to any person who has no right to receive it. We may also contact you to ask you for further information in relation to your request to speed up our response.

Time limit to respond

We try to respond to all legitimate requests within one month. Occasionally it may take us longer than a month if your request is particularly complex or you have made a number of requests. In this case, we will notify you and keep you updated.

10. Glossary

LAWFUL BASIS

Legitimate Interest means the interest of our business in conducting and managing our business to enable us to give you the best service/product and the best and most secure experience. We make sure we consider and balance any potential impact on you (both positive and negative) and your rights before we process your personal data for our legitimate interests. We do not use your personal data for activities where our interests are overridden by the impact on you (unless we have your consent or are otherwise required or permitted to by law). You can obtain further information about how we assess our legitimate interests against any potential impact on you in respect of specific activities by contacting us.

Performance of Contract means processing your data where it is necessary for the performance of a contract to which you are a party or to take steps at your request before entering into such a contract.

Comply with a legal or regulatory obligation means processing your personal data where it is necessary for compliance with a legal or regulatory obligation that we are subject to.

THIRD PARTIES

External Third Parties

Service providers acting as processor who provide IT and system administration services.

Professional advisers acting as processors who may provide consultancy, banking, legal, insurance and accounting services.

Regulators and other authorities acting as processors who require reporting of processing activities in certain circumstances.

YOUR LEGAL RIGHTS

You have the right to:

Request access to your personal data (commonly known as a “data subject access request”). This enables you to receive a copy of the personal data we hold about you and to check that we are lawfully processing it.

Request correction of the personal data that we hold about you. This enables you to have any incomplete or inaccurate data we hold about you corrected, though we may need to verify the accuracy of the new data you provide to us.

Request erasure of your personal data. This enables you to ask us to delete or remove personal data where there is no good reason for us continuing to process it. You also have the right to ask us to delete or remove your personal data where you have successfully exercised your right to object to processing (see below), where we may have processed your information unlawfully or where we are required to erase your personal data to comply with local law. Note, however, that we may not always be able to comply with your request of erasure for specific legal reasons which will be notified to you, if applicable, at the time of your request.

Object to processing of your personal data where we are relying on a legitimate interest (or those of a third party) and there is something about your particular situation which makes you want to object to processing on this ground as you feel it impacts on your fundamental rights and freedoms. You also have the right to object where we are processing your personal data for direct marketing purposes. In some cases, we may demonstrate that we have compelling legitimate grounds to process your information which override your rights and freedoms.

Request restriction of processing of your personal data. This enables you to ask us to suspend the processing of your personal data in the following scenarios: (a) if you want us to establish the data’s accuracy; (b) where our use of the data is unlawful but you do not want us to erase it; (c) where you need us to hold the data even if we no longer require it as you need it to establish, exercise or defend legal claims; or (d) you have objected to our use of your data but we need to verify whether we have overriding legitimate grounds to use it.

Request the transfer of your personal data to you or to a third party. We will provide to you, or a third party you have chosen, your personal data in a structured, commonly used, machine-readable format. Note that this right only applies to automated information which you initially provided consent for us to use or where we used the information to perform a contract with you.

Withdraw consent at any time where we are relying on consent to process your personal data. However, this will not affect the lawfulness of any processing carried out before you withdraw your consent. If you withdraw your consent, we may not be able to provide certain products or services to you. We will advise you if this is the case at the time you withdraw your consent.

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  • An Introduction to Agency PSLs for Contractors

    If you’re a contractor working through an agency, chances are you’ve come across Preferred Supplier Lists (PSLs) in the past. In simple terms, a PSL is a pre-approved list of umbrella companies that an agency will work with. So, what exactly does it mean for you and your chosen umbrella company?

    PSLs can be confusing. Sometimes they are strict, yet other times they can be merely guidelines. Searching for answers doesn’t seem to help clarify the situation either. If you look up PSLs online, you’ll find that most of the information on them is there to help agencies and not contractors. Fortunately, Umbrella Broker is here to buck the trend. Read on as we take a closer look at PSLs, why they exist and how they could affect you.

    A brief introduction to PSLs

    A PSL – also known as an ASL (approved supplier list) – is something you’ll find at the majority of agencies nowadays. They’re an agencies way of controlling who their contractors use as an umbrella company.

    Some agencies use simply them as the name suggests – as a way to recommend their preferred umbrella suppliers to their contractors. Yet others are stricter and refuse to work with umbrella companies that aren’t on their PSL. Why? The reasons are mainly two-fold…

    Compliance

    Agencies will openly admit that they use PSLs to maintain compliance. Essentially, they want umbrella companies to be legally compliant, meeting all the same regulations as they do themselves. So, they make an ASL or PSL comprising of all the compliant umbrella companies they have either audited or belong to a trusted umbrella organisations such as the FCSA.

    They will complete regular audits of companies on their PSL to ensure they are always following the correct rules. That way, they can let contractors bill through these umbrella companies safe in the knowledge that there will be no future kick back to them should that contractor have chosen to be liberal with their tax payments

    Financial incentives

    Another reason, which some agencies are less open about, is the financial incentives given to agencies by the umbrella companies that are on their PSLs.

    Having a list of companies which you prefer or insist on contractors using will naturally provide more business for those companies. This limits the companies that contractors can use, or at least points them in a certain direction, helping those on the PSL sell more.

    In return for sending contractors their way, the favour is returned by the umbrella company in the form of commission payments, although these aren’t always strictly legal.

    The benefits of PSLs for contractors

    We’ve firmly established that PSLs are advantageous to agencies. But on top of that, they can also help contractors in a number of ways:

    1.    Trust

    Most agencies’ PSLs will only include companies with certain accreditations, such as:

    These organisations require certain standards from their members. Companies have to be compliant to gain accreditation. With that in mind, a good PSL provides you with a list of umbrella companies you can trust.

    2.    Specialists

    While some umbrella companies provide services across sectors, others specialise in specific industries. If you’re looking for the latter, a PSL could help. Agencies might only include umbrella companies that operate in and understand your sector.

    This will make things easier going forward, as they can assist with any industry-specific issues or regulations that come up.

    3.    Services

    Agencies will know what services and additional extras their clients require, from fundamental payroll and benefits to different kinds of insurance. Through a PSL, you could find that all companies provide these services – rather than having to search and filter through many that don’t.

    4.    Convenience

    Let’s face it, comparing umbrella companies can be stressful if you go it alone. Where do you start, with so many different providers, varying service levels and prices?

    A PSL gives you a list of recommended umbrella companies to choose from to narrow things down. Be wary, however, as they may just be companies who have agreed to pay the agency for this privilege.

    To make their services more attractive, PSL umbrella companies may even offer a discount to contractors operating through certain agencies.

    How to navigate a PSL

    A PSL could have several of the benefits listed above. However, it could have none. It’s important to ask agencies about their PSL or ASL so you know exactly where you stand. Find out whether they are accredited, industry specialists and what services they offer.

    Make sure you’re clear on whether the list is preferred or obligatory. If it’s just a recommended list of umbrella companies, there’s nothing stopping you looking elsewhere for a better deal and more comprehensive service.

    It’s also worth noting that agencies can’t legally take money for pushing contractors towards using a particular umbrella company. So, if you suspect this is happening, remember there’s no obligation to use those umbrella companies.

    Alternatives to a PSL

    Despite all the potential benefits of a PSL to contractors, it’s quite rare that they are fine-tuned and filtered in the contractors interests. Instead, they focus on the benefits to agencies, with compliance top of the list. While compliance also matters to contractors, you ideally want an umbrella company that ticks all the boxes and gives you the greatest financial benefit.

    Fortunately, there is a way to understand how each umbrella company benefits you financially. Using a reliable umbrella company comparison site, you can compare providers based on what’s important to you. Whether it’s the price, reviews and ratings, or additional benefits, you can find the perfect company for you without any obligation.

    How can we help?

    At Umbrella Broker, we make it easy for contractors to find the perfect umbrella company for their needs. We have a wide collection of handpicked, well-reviewed providers, ready for you to compare online. Using our fast comparison tool, you can compare the very best umbrella companies based on your specific details.

    See your take home pay, any taxes and the effect of any benefits. If you want to know more, simply click on the chosen provider for more information. Best of all, there’s no need to resubmit information if you want to see how a change in pay would impact your take-home pay or tax. It’s never been easier to choose the best umbrella company for you.

  • What Exactly is an Umbrella Company?

    Contracting is an exciting career change for professionals in all kinds of sectors. It provides more income, added freedom and extra flexibility in the way you work. Rather than providing your services to an employer, you sell them directly to a client who pays you much like another company.

    However, unlike another company, you don’t have to use the same invoicing and payment route. Contractors can choose between setting up a limited company and working through an umbrella company. Unlike the sometimes-overwhelming step of setting up a limited company, an umbrella company provides a simple and straightforward way to start your contracting career.

    Want to know more? Read on as Umbrella Broker looks at how umbrella companies work, how they compare to the alternatives and whether a contractor umbrella company is right for you.

    The basics of umbrella companies

    It’s understandable that some people are unfamiliar with umbrella companies. If you’re not a contractor, they’re not really something you will encounter. However, they’re actually one of the most common options for contractors because of how easy they make it to work for yourself.

    While limited companies need to be set up and run by contractors, umbrella companies simply hire contractors as pay-as-you-earn (PAYE) employees. You are added to the payroll of the umbrella company and pay a fee to them. For this fee, they take care of all your administrative and financial duties – like a permanent employer.

    They will provide statutory rights like insurance and paid leave. They’re also responsible for paying your taxes, so any money you receive is your take home pay. However, unlike a permanent employer, your umbrella company won’t set you work. You can take on contracts as normal, focus on work and leave the administrative work to them.

    How do umbrella companies work?

    When you’re employed by an umbrella company, you simply submit your timesheet to them after each contract. They will then invoice your client and chase payments, like a middle man working on your behalf. Once payment is received, the umbrella company will deduct and pay the right amount of tax and national insurance contributions (NICs) from your wage and transfer you the final sum.

    Should I use an umbrella company?

    Umbrella companies aren’t for everyone. The alternative – setting up your own limited company – provides higher income as a trade-off for more administrative work. With that in mind, umbrella companies are the ideal solution for contractors that don’t have the time to run their own business while also completing contract work.

    Unlike a limited company, there’s no need to keep track of different payments, create and send invoices or calculate your own tax and NICs. It also removes the burden of company accounts and VAT returns, so you have complete peace of mind and can focus on the job at hand for each contract you work on.

    You don’t have to kick back and relax though. The time and energy you save can be put towards more work or other projects. You could even spend the time on training to improve your skills and secure higher-paid contracts in future.

    Umbrella companies are also useful for people who are new to contracting. Many professionals use them as a transition between regular employment and running their own business. As you become more experienced and establish a bigger client network, it’s possible to switch to a limited company at a later date.

    It’s also the ideal route if you only plan to work in contracting for a temporary period as it’s easy to move in and out of an umbrella company – as opposed to setting up and dissolving a limited company. For that reason, many professionals use umbrella companies to try out contracting and see if it suits them.

    Umbrella company vs limited company

    Setting up a limited company, as mentioned, is the main alternative to working through an umbrella company. It’s the route that matches “be your own boss” to a tee. And it has significant financial benefits if you’re willing to put in the extra work.

    Limited companies are a more tax efficient option. Contractors name themselves as the company director and sole shareholder, taking a salary as dividends. There are other tax benefits too, with directors entitled to claim back tax on accountancy fees or office costs in some cases.

    Another benefit with limited companies is the removal of a service fee. As you’re running your own company and taking care of your own finances, there’s no need to pay a service fee from your income.

    However, with this role comes extra responsibility. Unlike an umbrella company, you’re solely responsible for your finances, tax and general administration. That means processing invoices, chasing payments and paying yourself through the company. It may even be worth hiring an accountant to assist with these responsibilities, which could take away some of the financial benefit.

    Making your choice

    To decide between an umbrella company and limited company, carefully consider how much time and effort you can commit to contracting. If you’re just starting out or, for whatever reason, you don’t have the time to take care of invoicing and tax, an umbrella company may be the best option.

    Alternatively, if you’re looking for the highest possible income and you’re prepared to commit the time and effort – a limited company might be suitable. Remember, a limited company is more of a commitment, while you can easily use an umbrella company for a short period to test things out.

  • Umbrella vs Limited Company: Which Is Right for Contractors?

    Umbrella companies are a great option for contractors who want to keep things simple. They take the administrative burden of invoicing, payroll and tax off your plate, giving you a final sum of ‘take home pay’ every month, or after each job.

    Eventually, however, many contractors make the switch from an umbrella company to becoming a limited company. Generally, it’s because of reduced taxation – and higher income as a result.

    But when is the right time to make the switch? And are you ready? Read on as Umbrella Broker takes a look at the transition from umbrella to limited company.

    The best fit for you

    Working for yourself isn’t a case of one size fits all. It’s important to find the best way of doing things, especially when you’re starting out. Most self-employed professionals begin as sole traders, which is the simplest way to effectively run a business – without any of the registration fees.

    As things become more complex, many contractors make the move to an umbrella company. These firms take on contractors as employees, taking payments and paying tax on their behalf while paying out income monthly or on a job-by-job basis. This is something of a hassle-free option for contractors.

    However, as business begins to grow and more opportunities arise, it may become more suitable to set up a limited company. This changes how you’re taxed and can increase your income as a result. Unfortunately, it’s easier said than done, so it’s important not to dive in too soon.

    Introducing the umbrella company

    Umbrella companies are all about simplicity. Getting set up is refreshingly simple. You just need to sign a contract with an umbrella company, who will contract your services to other businesses. You don’t have to actually set up a company and there’s minimal administration going forward

    Day to day, umbrella companies take care of invoicing, payroll and taxation. In many cases, they even source contracts for you so you don’t need to market yourself and network. Sometimes, it’s necessary to find your own work and you may have to review your contract with the umbrella company occasionally. However, by and large, you can focus on your job and whatever you choose to do outside of work.

    Drawbacks of umbrella companies

    It’s not all advantageous though. This minimal responsibility is matched with a reduced level of control. Umbrella companies determine how you are paid and taxed for sick days, holidays and maternity or paternity leave.

    Using an umbrella company also means your tax is paid through pay as you earn (PAYE). This is the system used by permanent employees across the UK, and on the plus side it is a lot simpler as this is taken care of by the umbrella company. So, less admin time on the accounts. However, you can’t take advantages of any of the tax benefits that come with having a limited company.

    Finally, you will need to pay a small fee to work through an umbrella company. This is typically a fair amount, but it does mean your pay will be reduced to around the 70% mark when combined with tax deductions. In most cases, this will still be significantly better than what you would have earnt in permanent employment. And with a steady stream of contracts and less time hunting for new work, you can easily offset the fees.

    What about limited companies?

    Limited companies are a tax-efficient alternative for contractors, allowing them to maximise their take home pay. As a contractor, you become the director of your company, as well as the sole shareholder. This allows you to claim numerous extra expenses as well as drawing some of your funds out as a dividend, which is subject to far less tax than the PAYE rate.

    Needless to say, limited companies are financially beneficial for contractors. As mentioned, working through an umbrella company, you can expect to take home around 70% of your earnings. In contrast, a limited company will typically provide over 80% of your earnings as take-home pay.

    Limited company drawbacks

    There are some downsides to limited company ownership. First of all, you will need to set up the business. This requires choosing a name and submitting your details to Companies House either online or on paper. This small step is well worth it considering the financial benefit in the long term.

    When switching from umbrella to limited, you also have to once again take on the administrative burden of invoicing and taxation. You’re completely responsible for your finances – and that of your company – so you have to chase clients for payments and make sure everything is spot on for tax.

    Fortunately, accounting services can reduce the burden of these tasks, either by assisting or taking them on completely. You may find that the price of professional accounting assistance is more than covered by the financial benefit of running a limited company.

    Time to switch

    The extra control of a limited company versus working through an umbrella can be useful as a contractor. If things go wrong or you’re expecting a lack of work for the foreseeable future, it’s much easier to prepare your finances and adapt to the changing situation.

    If you’re working through an umbrella company and you’re ready to take on the challenges explained above, it’s time to start setting up your limited company. Be sure to inform any existing clients about your plans to set up as a limited company as well as any service providers or suppliers.

    Following this, set up a business bank account and inform HMRC of your changed status. You will need to register for corporation tax within 3 months of beginning to trade and register for VAT through your company. To pay yourself a director’s salary, you’ll also need to register as an employer with HMRC.

  • Are Umbrella Companies Exempt from IR35?

    Introducing IR35 (And How Umbrella Companies Can Help)

    With hefty fees for non-compliance, it’s essential for contractors to understand IR35 and umbrella companies. In short, IR35 legislation is used to distinguish between companies providing a service to clients and people who are essentially employed by those companies. But there are plenty of ins, outs and tricky points to be aware of, including the role of umbrella companies. Confused yet?

    Don’t be caught out. Read on for the Umbrella Broker guide to IR35, your status and how umbrella companies could help.

    A short history lesson in IR35

    The road to IR35 started in the 1980s, when HMRC introduced a rule making recruitment companies liable for any tax errors they made prior to paying contractors. It made working with self-employed contractors far riskier for recruitment companies, with many subsequently refusing to deal with them.

    To continue working with recruitment companies, contractors began setting themselves up as limited companies, for which recruitment companies held no liability. This also meant they could pay themselves in dividends, which are subject to lower rates of income tax and exempt from national insurance contributions.

    Understandably, this meant HMRC was taking significantly less tax from the market. The new system also enabled companies to effectively ‘hire’ limited companies without the usual responsibilities as an employer. To counter these issues, they introduced IR35 in 2000.

    What is IR35?

    Also known as the Intermediaries Legislation, IR35 aimed to establish a contractor’s true employment status. So, those who were operating through limited companies – known as ‘intermediary companies’ or ‘intermediaries’ – would still have to pay tax and national insurance under traditional employee rules.

    Since its introduction, it’s become hugely important for contractors to assess their status. Operating through an intermediary and paying less tax and national insurance may seem beneficial. However, any savings will likely have to be paid back. In most cases, this is further down the line when you don’t have anything close to the full amount readily available.

    Who is in and who is out?

    With that in mind, it’s important to determine whether you’re operating inside IR35 or outside of it. Unfortunately, there is no clear way to tell because IR35 has no set definition for a case which is inside or outside of the regulation. To assess your status, HMRC provides status tests online.

    The tests can be used by an agency placing a worker, an organisation hiring a worker, or a worker themselves who is providing a service. They cover several different aspects of the working engagement:

    • Responsibilities of the worker
    • Who decides what the worker needs to do
    • Who decides the terms of work – when and where it’s done
    • How the worker is paid
    • Whether the work engagement includes any expenses or benefits

    These criteria help determine who is in control of the worker. When there is a right to exercise control over a worker, they are likely to be classed as an employee. They also assess the right to employ other assistants or substitutes to perform the job. Employees are hired to do the job directly, themselves, while truly self-employed contractors may hire someone to do it for them if necessary.

    After taking the status tests, you can print your results as a way to demonstrate that you took reasonable care. These assessments need to be completed for each work assignment. If any of your working arrangements change, you will need to check again whether you’re inside or outside IR35.

    Why it’s worth checking

    As well as avoiding costs further down the line, there are a multitude of reasons to check the IR35 status of contracting work:

    • Comparing jobs – If you’re in a position to choose between two or more contracts, IR35 status could be a deciding factor. Jobs that are outside IR35 typically provide more income because of lower taxation.
    • Operating structure – Checking your IR35 status could provide better direction for your contracting work. If you’re operating inside IR35, for instance, it may be worth considering an umbrella company. On the other hand, if you’re operating outside IR35, it could be beneficial to set up a limited company.
    • Limited companies – If you’re already operating as a limited company, being inside IR35 will determine how you need to receive and pay tax on income.

    What about umbrella companies?

    A popular way to circumnavigate IR35 is by using an umbrella company. Umbrella companies employ contractors and work as an intermediary between them and their clients. This provides a balance between the ‘be your own boss’ benefits of contracting and the simplicity of being an employee.

    With an umbrella company, you are classed as an employee, with no need to worry about payroll, accounts and taxation. This means there is no need to determine your IR35 status time and time again. Contracting umbrella companies are fully tax-compliant, so you won’t be caught out by any charges in the future.

    Invoicing and chasing payments is also taken care of by umbrella companies, removing a stressful and time-consuming task for contractors. Essentially, they eliminate the cost and hassle of operating a limited company.

    Penalties and tax implications

    Under IR35, the traditional low salary & high dividend model – used by limited companies – is unavailable to contractors. And if you’re caught by IR35, regardless of whether you’re using a limited company or an umbrella company, you will need to process your full contract value through PAYE.

    This means that a Limited Company will be largely uneconomical as it adds an extra cost and administration burden when compared to an umbrella. In the event you fail to process your payments through PAYE, you could be subject to an IR35 fine of up to 100% of the unpaid taxes due. In short, getting your tax calculations right is paramount.

    Why an umbrella is the smart move

    Whether it’s IR35 penalties or increased taxation from being classed as an employee (even if you have a Limited company), IR35 can significantly impact the amount contractors take home each month. This means using an umbrella company is the smart way to ensure that throughout your contracting career it doesn’t matter whether you’re caught by IR35 or not.

  • Insurance For Contractors

    Insurance for contractors is of paramount importance, covering you against legal costs, unexpected damage and even cyber attacks. There are several kinds of contractor insurance available, so it’s a smart move to get familiar before choosing the right one for you.

    That’s where Umbrella Broker can help, with our review of the different types of cover available to contractors…

     

    Public liability insurance

    There are two kinds of liability insurance available for contractors. The first is public liability insurance, which covers any risk to the public and the resulting claims. This could be anything from your postman slipping when delivering to your site, falling debris from scaffolding causing injury or just somebody tripping over a loose cable while passing.

    It also includes your clients when they visit your premises, as well as any damage that may be caused by you or your employees when visiting a client’s site. Let’s say you knock over something expensive while you’re there – they won’t think twice about claiming for that damage.

    In short, public liability insurance is essential for anyone who deals with customers or clients face to face. The cost will depend on a number of factors, such as:

    • Your industry
    • How many employees and clients you have
    • Your location
    • Previous claims

     

    Employers’ liability insurance

    The other type of cover is employers’ liability insurance, which is a legal requirement for contractors with one or more employees. Here’s the difference: employers’ liability insurance protects you against costs from compensation should employees become injured or unwell from work.

    As soon as you take on any employees, you need to be covered for at least £5 million by employers’ liability insurance. Insurance must be provided by an authorised insurer and it includes any casual workers or short-term contracts. Fail to do so and you could face a fine of up to £2,500 per uninsured day.

     

    Professional indemnity insurance

    With professional indemnity insurance, you’re protected from any claims against your services, products or advice. So, if a client claims that your work is substandard or incomplete, your insurance will cover the cost of the legal defence and any expenses as well as any compensation should they succeed in claiming against you.

    Professional indemnity insurance is required for several professions – such as management consultancy, business consultancy and IT contractors – in order to secure contracts. Basically, clients want to know you’re covered, so they know they’re covered too.

    Even if you’re not legally obliged to take out professional indemnity insurance, it’s always better to be safe than sorry. Legal fees and compensation can stack up and cost thousands just for one claim. They can be crippling if you have to fork out yourself, while the cost of insurance is completely manageable.

     

    Personal accident insurance

    As a contractor, there’s no sick pay to tide you by if a serious injury stops you working. Instead, you’ll be short of money or reliant on your own savings. That’s where personal accident insurance comes in. When you’re covered by personal accident insurance, you will receive an ongoing payment to cover the loss in profits while you’re out of work, or a lump sum if you suffer a permanent disability.

    Personal accident insurance can also be taken out for key employees. Again, if one of your employees is injured, it’s you that will need to cover their wage or sick pay. Statutory Sick Pay is £92.05 per week for up to 28 weeks and can no longer be reclaimed from the government. That’s over £350 per month, which could cause serious problems for some contractors if they need to cover it themselves.

    As well as temporary injuries, personal accident insurance can be taken out to cover death. A lump sum will be paid out for people who are covered by the policy. This could help relatives of the contractor, or the contractor themselves if one of their employees can no longer work.

     

    Contents insurance

    Insurance for your office contents protects you in case any office equipment or furniture is lost, stolen or damaged. This could be computers and office phones, furniture like desks and chairs or even important documents that are stored on your premises.

    You can even insure portable items, which aren’t stored permanently in your office. Fortunately, with the right flexible policy, you can get insurance for remote working too – so yourself or any employees will be insured when working at home.

     

    Buildings insurance

    Buildings insurance is useful for contractors who own their office. Unlike contents insurance, it covers fire and water damage to the office itself. Without it, a fire or leak could set you back thousands. However, it’s important to have contents insurance alongside buildings insurance, as no contents are covered by the latter.

     

    Cyber insurance

    Most contractors are reliant on digital tools in some way or another – whether it’s for communication, payment or just data storage. Needless to say, any data breaches, hacks or information loss can set you back and cost you big. That’s where cyber insurance comes in.

    Also known as cyber risk insurance, it covers you for the recovery process after any cyber damage or loss. This could include investigating what went wrong, notifying and compensating clients, and reimbursing monetary losses.

     

    Which type is right for you?

    Contractors’ insurance isn’t a case of “either-or”. Instead, it’s about deciding where the risk lies and which plans are required to cover you. Professional Indemnity and Public Liability are the two most common insurance types held by contractors – in addition to Employers’ Liability insurance because it’s required by law.

    However, Professional Indemnity insurance is required by some regulators and essential for members of some professional bodies. Because of this, both Professional Indemnity and Employers’ Liability insurance are provided as standard by umbrella companies.

    The other types of insurance – such as cover for contents, cyber attacks or personal accidents – are optional, but will provide that extra peace of mind.

     

    Make things easier

    If you’re looking for peace of mind with contracting work, Umbrella Broker can help. We help contractors find the right umbrella company and accountant, so there’s no need to worry about payroll and taxes.

    Need more information? Feel free to contact us today.

     

  • Umbrella Company Services – The Next Steps for Contractors

    8 Key Steps to Start Using Umbrella Services

    Umbrella companies bridge the gap between full time employment and self-employed contracting. They take care of payroll, provide regular payment terms and in some cases offer employment benefits like paid holidays and sick pay.

    To sign up with an umbrella company online you’ll need to disclose some personal information along with signing a contract of employment, just like you would if you were accepting a job. Of course, working for an umbrella isn’t quite like any other means of employment but the paperwork you’ll fill out is very similar.

    All of the applications on Umbrella Broker are hosted by Adobe Sign, a safe and secure way to sign your contract and pass your personal details onto the umbrella.

    Umbrella Broker does not store the details you enter into these forms, they go directly to your new umbrella.

    Examples of the information in an application include:

    • Your name and address
    • Your contract details
    • Your bank details (so they can pay you)

    When you’ve completed your application, you chosen umbrella will hand hold you through a series of steps designed to ensure your payments run smoothly.

    Read on as we look at umbrella companies and how the process works after applying.

    1. Contacting your client or agency

    Having applied, your umbrella company will contact your end client or recruitment agency. They do this to inform clients or agencies that they will be invoicing on your behalf. This is a key step for yourself, your client or agency and your umbrella company as it’s the main thing that will be changing for all parties. You no longer have to worry about invoicing or chasing up payments.

    2. Verification

    Your umbrella company also needs to verify your identity. As a company you work through, they may never meet you. But they still need to check you’re entitled to work in the UK, for instance. To do so, they usually need a copy of your official ID documentation.

    This is also important because they need to cover you under their insurance. Umbrella companies typically provide public liability, professional indemnity and employers’ liability insurance for their employees. Again, this is a worry taken off your mind as it covers you against most damages, compensation or legal fees.

    3. Engagement

    To assist with set up, your agency or client will send an engagement pack to the umbrella company. This will include a schedule of your work and payment terms. Within this, your client or agency will also request details of your umbrella company’s insurance information and evidence of tax compliance, in some instances. Essentially, it’s a way of making sure you’re covered from day one.

    4. Contract exchange

    Your agency and umbrella company will exchange a contract for service. This outlines the agreement between the two companies and is separate from the contract you’ll sign with the umbrella company to become an employee.

    5. Timesheet

    Once the contracts are in place, your umbrella company will add you as an employee and walk you through the process of providing them with a timesheet. Your timesheet contains information about the hours you’ve worked each week for one or multiple clients, as well as any expenses you’re entitled to claim.

    6. Invoicing

    Once you submit your first timesheet, your umbrella company will raise an invoice for your work and send it to your recruitment agency or end client. The client or agency will pay your umbrella company, who will process the funds through pay as you earn (PAYE) tax either the same day or the day following payment.

    7. Payment

    The next step depends on the payment terms you have agreed with your umbrella company. They will either pay you weekly or monthly, with all the funds you have accumulated for that period – minus tax and national insurance. You will receive a net payment along with a payslip for your own records, as you would with a regular employer.

    8. Tax payments

    Finally, it’s up to the umbrella company to process the money deducted from your pay for income tax and national insurance. Once a month, they will send the correct amount to HMRC on your behalf.

    Steps you should take

    If you’re ready to choose an umbrella company, there are also some steps to take yourself to make sure you get the right umbrella services for you.

    1. Background check

    Find out as much as you can about the umbrella company’s background. Check their credit rating and how long the company has been trading. Both of these are good indicators of how much you can trust a company.

    2. Check the fees

    Umbrella companies charge contractors a fee for their services, which can vary depending on the provider. Find out whether you will be paying weekly or monthly – and how much you’re paying.

    3. And what’s included…

    The cheapest umbrella services aren’t always the best. Some umbrella companies will charge extra for things like processing your expenses, while others will include benefits like statutory leave and sick pay as part of their fee. Consider the monetary value of these benefits when you’re comparing umbrella companies.

    4. Contracts

    Your umbrella company acts as a full-time employer, so you want to make sure you’re covered with a full contract of employment. This is where your statutory rights and benefits will be outlined, so it’s essential to check over before signing anything. Look for payment terms – when and how you’ll be paid – along with the process or penalties should you want to leave.

    5. Support

    Another key element in your umbrella service is the support on offer. Firstly, what are the umbrella company’s opening hours? Do you have a contact for outside-of-hours support? Contracting is far from a 9 to 5 lifestyle, so you’ll want to be able to contact them whenever you need assistance.

    Secondly, how are timesheets submitted? It may be useful if your umbrella company provides an online portal, making it easier to keep track of what you’ve submitted and do things when it suits you.

    Umbrella comparison made easy

    Umbrella Broker provides a quick and easy way for contractors to compare umbrella companies. We provide up to ten free umbrella quotes in under 2 minutes, so you don’t have to do the hard work.

    Need any assistance? Feel free to get in touch with our team.

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  • An Introduction to Agency PSLs for Contractors

    If you’re a contractor working through an agency, chances are you’ve come across Preferred Supplier Lists (PSLs) in the past. In simple terms, a PSL is a pre-approved list of umbrella companies that an agency will work with. So, what exactly does it mean for you and your chosen umbrella company?

    PSLs can be confusing. Sometimes they are strict, yet other times they can be merely guidelines. Searching for answers doesn’t seem to help clarify the situation either. If you look up PSLs online, you’ll find that most of the information on them is there to help agencies and not contractors. Fortunately, Umbrella Broker is here to buck the trend. Read on as we take a closer look at PSLs, why they exist and how they could affect you.

    A brief introduction to PSLs

    A PSL – also known as an ASL (approved supplier list) – is something you’ll find at the majority of agencies nowadays. They’re an agencies way of controlling who their contractors use as an umbrella company.

    Some agencies use simply them as the name suggests – as a way to recommend their preferred umbrella suppliers to their contractors. Yet others are stricter and refuse to work with umbrella companies that aren’t on their PSL. Why? The reasons are mainly two-fold…

    Compliance

    Agencies will openly admit that they use PSLs to maintain compliance. Essentially, they want umbrella companies to be legally compliant, meeting all the same regulations as they do themselves. So, they make an ASL or PSL comprising of all the compliant umbrella companies they have either audited or belong to a trusted umbrella organisations such as the FCSA.

    They will complete regular audits of companies on their PSL to ensure they are always following the correct rules. That way, they can let contractors bill through these umbrella companies safe in the knowledge that there will be no future kick back to them should that contractor have chosen to be liberal with their tax payments

    Financial incentives

    Another reason, which some agencies are less open about, is the financial incentives given to agencies by the umbrella companies that are on their PSLs.

    Having a list of companies which you prefer or insist on contractors using will naturally provide more business for those companies. This limits the companies that contractors can use, or at least points them in a certain direction, helping those on the PSL sell more.

    In return for sending contractors their way, the favour is returned by the umbrella company in the form of commission payments, although these aren’t always strictly legal.

    The benefits of PSLs for contractors

    We’ve firmly established that PSLs are advantageous to agencies. But on top of that, they can also help contractors in a number of ways:

    1.    Trust

    Most agencies’ PSLs will only include companies with certain accreditations, such as:

    These organisations require certain standards from their members. Companies have to be compliant to gain accreditation. With that in mind, a good PSL provides you with a list of umbrella companies you can trust.

    2.    Specialists

    While some umbrella companies provide services across sectors, others specialise in specific industries. If you’re looking for the latter, a PSL could help. Agencies might only include umbrella companies that operate in and understand your sector.

    This will make things easier going forward, as they can assist with any industry-specific issues or regulations that come up.

    3.    Services

    Agencies will know what services and additional extras their clients require, from fundamental payroll and benefits to different kinds of insurance. Through a PSL, you could find that all companies provide these services – rather than having to search and filter through many that don’t.

    4.    Convenience

    Let’s face it, comparing umbrella companies can be stressful if you go it alone. Where do you start, with so many different providers, varying service levels and prices?

    A PSL gives you a list of recommended umbrella companies to choose from to narrow things down. Be wary, however, as they may just be companies who have agreed to pay the agency for this privilege.

    To make their services more attractive, PSL umbrella companies may even offer a discount to contractors operating through certain agencies.

    How to navigate a PSL

    A PSL could have several of the benefits listed above. However, it could have none. It’s important to ask agencies about their PSL or ASL so you know exactly where you stand. Find out whether they are accredited, industry specialists and what services they offer.

    Make sure you’re clear on whether the list is preferred or obligatory. If it’s just a recommended list of umbrella companies, there’s nothing stopping you looking elsewhere for a better deal and more comprehensive service.

    It’s also worth noting that agencies can’t legally take money for pushing contractors towards using a particular umbrella company. So, if you suspect this is happening, remember there’s no obligation to use those umbrella companies.

    Alternatives to a PSL

    Despite all the potential benefits of a PSL to contractors, it’s quite rare that they are fine-tuned and filtered in the contractors interests. Instead, they focus on the benefits to agencies, with compliance top of the list. While compliance also matters to contractors, you ideally want an umbrella company that ticks all the boxes and gives you the greatest financial benefit.

    Fortunately, there is a way to understand how each umbrella company benefits you financially. Using a reliable umbrella company comparison site, you can compare providers based on what’s important to you. Whether it’s the price, reviews and ratings, or additional benefits, you can find the perfect company for you without any obligation.

    How can we help?

    At Umbrella Broker, we make it easy for contractors to find the perfect umbrella company for their needs. We have a wide collection of handpicked, well-reviewed providers, ready for you to compare online. Using our fast comparison tool, you can compare the very best umbrella companies based on your specific details.

    See your take home pay, any taxes and the effect of any benefits. If you want to know more, simply click on the chosen provider for more information. Best of all, there’s no need to resubmit information if you want to see how a change in pay would impact your take-home pay or tax. It’s never been easier to choose the best umbrella company for you.

  • What Exactly is an Umbrella Company?

    Contracting is an exciting career change for professionals in all kinds of sectors. It provides more income, added freedom and extra flexibility in the way you work. Rather than providing your services to an employer, you sell them directly to a client who pays you much like another company.

    However, unlike another company, you don’t have to use the same invoicing and payment route. Contractors can choose between setting up a limited company and working through an umbrella company. Unlike the sometimes-overwhelming step of setting up a limited company, an umbrella company provides a simple and straightforward way to start your contracting career.

    Want to know more? Read on as Umbrella Broker looks at how umbrella companies work, how they compare to the alternatives and whether a contractor umbrella company is right for you.

    The basics of umbrella companies

    It’s understandable that some people are unfamiliar with umbrella companies. If you’re not a contractor, they’re not really something you will encounter. However, they’re actually one of the most common options for contractors because of how easy they make it to work for yourself.

    While limited companies need to be set up and run by contractors, umbrella companies simply hire contractors as pay-as-you-earn (PAYE) employees. You are added to the payroll of the umbrella company and pay a fee to them. For this fee, they take care of all your administrative and financial duties – like a permanent employer.

    They will provide statutory rights like insurance and paid leave. They’re also responsible for paying your taxes, so any money you receive is your take home pay. However, unlike a permanent employer, your umbrella company won’t set you work. You can take on contracts as normal, focus on work and leave the administrative work to them.

    How do umbrella companies work?

    When you’re employed by an umbrella company, you simply submit your timesheet to them after each contract. They will then invoice your client and chase payments, like a middle man working on your behalf. Once payment is received, the umbrella company will deduct and pay the right amount of tax and national insurance contributions (NICs) from your wage and transfer you the final sum.

    Should I use an umbrella company?

    Umbrella companies aren’t for everyone. The alternative – setting up your own limited company – provides higher income as a trade-off for more administrative work. With that in mind, umbrella companies are the ideal solution for contractors that don’t have the time to run their own business while also completing contract work.

    Unlike a limited company, there’s no need to keep track of different payments, create and send invoices or calculate your own tax and NICs. It also removes the burden of company accounts and VAT returns, so you have complete peace of mind and can focus on the job at hand for each contract you work on.

    You don’t have to kick back and relax though. The time and energy you save can be put towards more work or other projects. You could even spend the time on training to improve your skills and secure higher-paid contracts in future.

    Umbrella companies are also useful for people who are new to contracting. Many professionals use them as a transition between regular employment and running their own business. As you become more experienced and establish a bigger client network, it’s possible to switch to a limited company at a later date.

    It’s also the ideal route if you only plan to work in contracting for a temporary period as it’s easy to move in and out of an umbrella company – as opposed to setting up and dissolving a limited company. For that reason, many professionals use umbrella companies to try out contracting and see if it suits them.

    Umbrella company vs limited company

    Setting up a limited company, as mentioned, is the main alternative to working through an umbrella company. It’s the route that matches “be your own boss” to a tee. And it has significant financial benefits if you’re willing to put in the extra work.

    Limited companies are a more tax efficient option. Contractors name themselves as the company director and sole shareholder, taking a salary as dividends. There are other tax benefits too, with directors entitled to claim back tax on accountancy fees or office costs in some cases.

    Another benefit with limited companies is the removal of a service fee. As you’re running your own company and taking care of your own finances, there’s no need to pay a service fee from your income.

    However, with this role comes extra responsibility. Unlike an umbrella company, you’re solely responsible for your finances, tax and general administration. That means processing invoices, chasing payments and paying yourself through the company. It may even be worth hiring an accountant to assist with these responsibilities, which could take away some of the financial benefit.

    Making your choice

    To decide between an umbrella company and limited company, carefully consider how much time and effort you can commit to contracting. If you’re just starting out or, for whatever reason, you don’t have the time to take care of invoicing and tax, an umbrella company may be the best option.

    Alternatively, if you’re looking for the highest possible income and you’re prepared to commit the time and effort – a limited company might be suitable. Remember, a limited company is more of a commitment, while you can easily use an umbrella company for a short period to test things out.

  • Umbrella vs Limited Company: Which Is Right for Contractors?

    Umbrella companies are a great option for contractors who want to keep things simple. They take the administrative burden of invoicing, payroll and tax off your plate, giving you a final sum of ‘take home pay’ every month, or after each job.

    Eventually, however, many contractors make the switch from an umbrella company to becoming a limited company. Generally, it’s because of reduced taxation – and higher income as a result.

    But when is the right time to make the switch? And are you ready? Read on as Umbrella Broker takes a look at the transition from umbrella to limited company.

    The best fit for you

    Working for yourself isn’t a case of one size fits all. It’s important to find the best way of doing things, especially when you’re starting out. Most self-employed professionals begin as sole traders, which is the simplest way to effectively run a business – without any of the registration fees.

    As things become more complex, many contractors make the move to an umbrella company. These firms take on contractors as employees, taking payments and paying tax on their behalf while paying out income monthly or on a job-by-job basis. This is something of a hassle-free option for contractors.

    However, as business begins to grow and more opportunities arise, it may become more suitable to set up a limited company. This changes how you’re taxed and can increase your income as a result. Unfortunately, it’s easier said than done, so it’s important not to dive in too soon.

    Introducing the umbrella company

    Umbrella companies are all about simplicity. Getting set up is refreshingly simple. You just need to sign a contract with an umbrella company, who will contract your services to other businesses. You don’t have to actually set up a company and there’s minimal administration going forward

    Day to day, umbrella companies take care of invoicing, payroll and taxation. In many cases, they even source contracts for you so you don’t need to market yourself and network. Sometimes, it’s necessary to find your own work and you may have to review your contract with the umbrella company occasionally. However, by and large, you can focus on your job and whatever you choose to do outside of work.

    Drawbacks of umbrella companies

    It’s not all advantageous though. This minimal responsibility is matched with a reduced level of control. Umbrella companies determine how you are paid and taxed for sick days, holidays and maternity or paternity leave.

    Using an umbrella company also means your tax is paid through pay as you earn (PAYE). This is the system used by permanent employees across the UK, and on the plus side it is a lot simpler as this is taken care of by the umbrella company. So, less admin time on the accounts. However, you can’t take advantages of any of the tax benefits that come with having a limited company.

    Finally, you will need to pay a small fee to work through an umbrella company. This is typically a fair amount, but it does mean your pay will be reduced to around the 70% mark when combined with tax deductions. In most cases, this will still be significantly better than what you would have earnt in permanent employment. And with a steady stream of contracts and less time hunting for new work, you can easily offset the fees.

    What about limited companies?

    Limited companies are a tax-efficient alternative for contractors, allowing them to maximise their take home pay. As a contractor, you become the director of your company, as well as the sole shareholder. This allows you to claim numerous extra expenses as well as drawing some of your funds out as a dividend, which is subject to far less tax than the PAYE rate.

    Needless to say, limited companies are financially beneficial for contractors. As mentioned, working through an umbrella company, you can expect to take home around 70% of your earnings. In contrast, a limited company will typically provide over 80% of your earnings as take-home pay.

    Limited company drawbacks

    There are some downsides to limited company ownership. First of all, you will need to set up the business. This requires choosing a name and submitting your details to Companies House either online or on paper. This small step is well worth it considering the financial benefit in the long term.

    When switching from umbrella to limited, you also have to once again take on the administrative burden of invoicing and taxation. You’re completely responsible for your finances – and that of your company – so you have to chase clients for payments and make sure everything is spot on for tax.

    Fortunately, accounting services can reduce the burden of these tasks, either by assisting or taking them on completely. You may find that the price of professional accounting assistance is more than covered by the financial benefit of running a limited company.

    Time to switch

    The extra control of a limited company versus working through an umbrella can be useful as a contractor. If things go wrong or you’re expecting a lack of work for the foreseeable future, it’s much easier to prepare your finances and adapt to the changing situation.

    If you’re working through an umbrella company and you’re ready to take on the challenges explained above, it’s time to start setting up your limited company. Be sure to inform any existing clients about your plans to set up as a limited company as well as any service providers or suppliers.

    Following this, set up a business bank account and inform HMRC of your changed status. You will need to register for corporation tax within 3 months of beginning to trade and register for VAT through your company. To pay yourself a director’s salary, you’ll also need to register as an employer with HMRC.

  • Are Umbrella Companies Exempt from IR35?

    Introducing IR35 (And How Umbrella Companies Can Help)

    With hefty fees for non-compliance, it’s essential for contractors to understand IR35 and umbrella companies. In short, IR35 legislation is used to distinguish between companies providing a service to clients and people who are essentially employed by those companies. But there are plenty of ins, outs and tricky points to be aware of, including the role of umbrella companies. Confused yet?

    Don’t be caught out. Read on for the Umbrella Broker guide to IR35, your status and how umbrella companies could help.

    A short history lesson in IR35

    The road to IR35 started in the 1980s, when HMRC introduced a rule making recruitment companies liable for any tax errors they made prior to paying contractors. It made working with self-employed contractors far riskier for recruitment companies, with many subsequently refusing to deal with them.

    To continue working with recruitment companies, contractors began setting themselves up as limited companies, for which recruitment companies held no liability. This also meant they could pay themselves in dividends, which are subject to lower rates of income tax and exempt from national insurance contributions.

    Understandably, this meant HMRC was taking significantly less tax from the market. The new system also enabled companies to effectively ‘hire’ limited companies without the usual responsibilities as an employer. To counter these issues, they introduced IR35 in 2000.

    What is IR35?

    Also known as the Intermediaries Legislation, IR35 aimed to establish a contractor’s true employment status. So, those who were operating through limited companies – known as ‘intermediary companies’ or ‘intermediaries’ – would still have to pay tax and national insurance under traditional employee rules.

    Since its introduction, it’s become hugely important for contractors to assess their status. Operating through an intermediary and paying less tax and national insurance may seem beneficial. However, any savings will likely have to be paid back. In most cases, this is further down the line when you don’t have anything close to the full amount readily available.

    Who is in and who is out?

    With that in mind, it’s important to determine whether you’re operating inside IR35 or outside of it. Unfortunately, there is no clear way to tell because IR35 has no set definition for a case which is inside or outside of the regulation. To assess your status, HMRC provides status tests online.

    The tests can be used by an agency placing a worker, an organisation hiring a worker, or a worker themselves who is providing a service. They cover several different aspects of the working engagement:

    • Responsibilities of the worker
    • Who decides what the worker needs to do
    • Who decides the terms of work – when and where it’s done
    • How the worker is paid
    • Whether the work engagement includes any expenses or benefits

    These criteria help determine who is in control of the worker. When there is a right to exercise control over a worker, they are likely to be classed as an employee. They also assess the right to employ other assistants or substitutes to perform the job. Employees are hired to do the job directly, themselves, while truly self-employed contractors may hire someone to do it for them if necessary.

    After taking the status tests, you can print your results as a way to demonstrate that you took reasonable care. These assessments need to be completed for each work assignment. If any of your working arrangements change, you will need to check again whether you’re inside or outside IR35.

    Why it’s worth checking

    As well as avoiding costs further down the line, there are a multitude of reasons to check the IR35 status of contracting work:

    • Comparing jobs – If you’re in a position to choose between two or more contracts, IR35 status could be a deciding factor. Jobs that are outside IR35 typically provide more income because of lower taxation.
    • Operating structure – Checking your IR35 status could provide better direction for your contracting work. If you’re operating inside IR35, for instance, it may be worth considering an umbrella company. On the other hand, if you’re operating outside IR35, it could be beneficial to set up a limited company.
    • Limited companies – If you’re already operating as a limited company, being inside IR35 will determine how you need to receive and pay tax on income.

    What about umbrella companies?

    A popular way to circumnavigate IR35 is by using an umbrella company. Umbrella companies employ contractors and work as an intermediary between them and their clients. This provides a balance between the ‘be your own boss’ benefits of contracting and the simplicity of being an employee.

    With an umbrella company, you are classed as an employee, with no need to worry about payroll, accounts and taxation. This means there is no need to determine your IR35 status time and time again. Contracting umbrella companies are fully tax-compliant, so you won’t be caught out by any charges in the future.

    Invoicing and chasing payments is also taken care of by umbrella companies, removing a stressful and time-consuming task for contractors. Essentially, they eliminate the cost and hassle of operating a limited company.

    Penalties and tax implications

    Under IR35, the traditional low salary & high dividend model – used by limited companies – is unavailable to contractors. And if you’re caught by IR35, regardless of whether you’re using a limited company or an umbrella company, you will need to process your full contract value through PAYE.

    This means that a Limited Company will be largely uneconomical as it adds an extra cost and administration burden when compared to an umbrella. In the event you fail to process your payments through PAYE, you could be subject to an IR35 fine of up to 100% of the unpaid taxes due. In short, getting your tax calculations right is paramount.

    Why an umbrella is the smart move

    Whether it’s IR35 penalties or increased taxation from being classed as an employee (even if you have a Limited company), IR35 can significantly impact the amount contractors take home each month. This means using an umbrella company is the smart way to ensure that throughout your contracting career it doesn’t matter whether you’re caught by IR35 or not.

  • Insurance For Contractors

    Insurance for contractors is of paramount importance, covering you against legal costs, unexpected damage and even cyber attacks. There are several kinds of contractor insurance available, so it’s a smart move to get familiar before choosing the right one for you.

    That’s where Umbrella Broker can help, with our review of the different types of cover available to contractors…

     

    Public liability insurance

    There are two kinds of liability insurance available for contractors. The first is public liability insurance, which covers any risk to the public and the resulting claims. This could be anything from your postman slipping when delivering to your site, falling debris from scaffolding causing injury or just somebody tripping over a loose cable while passing.

    It also includes your clients when they visit your premises, as well as any damage that may be caused by you or your employees when visiting a client’s site. Let’s say you knock over something expensive while you’re there – they won’t think twice about claiming for that damage.

    In short, public liability insurance is essential for anyone who deals with customers or clients face to face. The cost will depend on a number of factors, such as:

    • Your industry
    • How many employees and clients you have
    • Your location
    • Previous claims

     

    Employers’ liability insurance

    The other type of cover is employers’ liability insurance, which is a legal requirement for contractors with one or more employees. Here’s the difference: employers’ liability insurance protects you against costs from compensation should employees become injured or unwell from work.

    As soon as you take on any employees, you need to be covered for at least £5 million by employers’ liability insurance. Insurance must be provided by an authorised insurer and it includes any casual workers or short-term contracts. Fail to do so and you could face a fine of up to £2,500 per uninsured day.

     

    Professional indemnity insurance

    With professional indemnity insurance, you’re protected from any claims against your services, products or advice. So, if a client claims that your work is substandard or incomplete, your insurance will cover the cost of the legal defence and any expenses as well as any compensation should they succeed in claiming against you.

    Professional indemnity insurance is required for several professions – such as management consultancy, business consultancy and IT contractors – in order to secure contracts. Basically, clients want to know you’re covered, so they know they’re covered too.

    Even if you’re not legally obliged to take out professional indemnity insurance, it’s always better to be safe than sorry. Legal fees and compensation can stack up and cost thousands just for one claim. They can be crippling if you have to fork out yourself, while the cost of insurance is completely manageable.

     

    Personal accident insurance

    As a contractor, there’s no sick pay to tide you by if a serious injury stops you working. Instead, you’ll be short of money or reliant on your own savings. That’s where personal accident insurance comes in. When you’re covered by personal accident insurance, you will receive an ongoing payment to cover the loss in profits while you’re out of work, or a lump sum if you suffer a permanent disability.

    Personal accident insurance can also be taken out for key employees. Again, if one of your employees is injured, it’s you that will need to cover their wage or sick pay. Statutory Sick Pay is £92.05 per week for up to 28 weeks and can no longer be reclaimed from the government. That’s over £350 per month, which could cause serious problems for some contractors if they need to cover it themselves.

    As well as temporary injuries, personal accident insurance can be taken out to cover death. A lump sum will be paid out for people who are covered by the policy. This could help relatives of the contractor, or the contractor themselves if one of their employees can no longer work.

     

    Contents insurance

    Insurance for your office contents protects you in case any office equipment or furniture is lost, stolen or damaged. This could be computers and office phones, furniture like desks and chairs or even important documents that are stored on your premises.

    You can even insure portable items, which aren’t stored permanently in your office. Fortunately, with the right flexible policy, you can get insurance for remote working too – so yourself or any employees will be insured when working at home.

     

    Buildings insurance

    Buildings insurance is useful for contractors who own their office. Unlike contents insurance, it covers fire and water damage to the office itself. Without it, a fire or leak could set you back thousands. However, it’s important to have contents insurance alongside buildings insurance, as no contents are covered by the latter.

     

    Cyber insurance

    Most contractors are reliant on digital tools in some way or another – whether it’s for communication, payment or just data storage. Needless to say, any data breaches, hacks or information loss can set you back and cost you big. That’s where cyber insurance comes in.

    Also known as cyber risk insurance, it covers you for the recovery process after any cyber damage or loss. This could include investigating what went wrong, notifying and compensating clients, and reimbursing monetary losses.

     

    Which type is right for you?

    Contractors’ insurance isn’t a case of “either-or”. Instead, it’s about deciding where the risk lies and which plans are required to cover you. Professional Indemnity and Public Liability are the two most common insurance types held by contractors – in addition to Employers’ Liability insurance because it’s required by law.

    However, Professional Indemnity insurance is required by some regulators and essential for members of some professional bodies. Because of this, both Professional Indemnity and Employers’ Liability insurance are provided as standard by umbrella companies.

    The other types of insurance – such as cover for contents, cyber attacks or personal accidents – are optional, but will provide that extra peace of mind.

     

    Make things easier

    If you’re looking for peace of mind with contracting work, Umbrella Broker can help. We help contractors find the right umbrella company and accountant, so there’s no need to worry about payroll and taxes.

    Need more information? Feel free to contact us today.

     

  • Umbrella Company Services – The Next Steps for Contractors

    8 Key Steps to Start Using Umbrella Services

    Umbrella companies bridge the gap between full time employment and self-employed contracting. They take care of payroll, provide regular payment terms and in some cases offer employment benefits like paid holidays and sick pay.

    To sign up with an umbrella company online you’ll need to disclose some personal information along with signing a contract of employment, just like you would if you were accepting a job. Of course, working for an umbrella isn’t quite like any other means of employment but the paperwork you’ll fill out is very similar.

    All of the applications on Umbrella Broker are hosted by Adobe Sign, a safe and secure way to sign your contract and pass your personal details onto the umbrella.

    Umbrella Broker does not store the details you enter into these forms, they go directly to your new umbrella.

    Examples of the information in an application include:

    • Your name and address
    • Your contract details
    • Your bank details (so they can pay you)

    When you’ve completed your application, you chosen umbrella will hand hold you through a series of steps designed to ensure your payments run smoothly.

    Read on as we look at umbrella companies and how the process works after applying.

    1. Contacting your client or agency

    Having applied, your umbrella company will contact your end client or recruitment agency. They do this to inform clients or agencies that they will be invoicing on your behalf. This is a key step for yourself, your client or agency and your umbrella company as it’s the main thing that will be changing for all parties. You no longer have to worry about invoicing or chasing up payments.

    2. Verification

    Your umbrella company also needs to verify your identity. As a company you work through, they may never meet you. But they still need to check you’re entitled to work in the UK, for instance. To do so, they usually need a copy of your official ID documentation.

    This is also important because they need to cover you under their insurance. Umbrella companies typically provide public liability, professional indemnity and employers’ liability insurance for their employees. Again, this is a worry taken off your mind as it covers you against most damages, compensation or legal fees.

    3. Engagement

    To assist with set up, your agency or client will send an engagement pack to the umbrella company. This will include a schedule of your work and payment terms. Within this, your client or agency will also request details of your umbrella company’s insurance information and evidence of tax compliance, in some instances. Essentially, it’s a way of making sure you’re covered from day one.

    4. Contract exchange

    Your agency and umbrella company will exchange a contract for service. This outlines the agreement between the two companies and is separate from the contract you’ll sign with the umbrella company to become an employee.

    5. Timesheet

    Once the contracts are in place, your umbrella company will add you as an employee and walk you through the process of providing them with a timesheet. Your timesheet contains information about the hours you’ve worked each week for one or multiple clients, as well as any expenses you’re entitled to claim.

    6. Invoicing

    Once you submit your first timesheet, your umbrella company will raise an invoice for your work and send it to your recruitment agency or end client. The client or agency will pay your umbrella company, who will process the funds through pay as you earn (PAYE) tax either the same day or the day following payment.

    7. Payment

    The next step depends on the payment terms you have agreed with your umbrella company. They will either pay you weekly or monthly, with all the funds you have accumulated for that period – minus tax and national insurance. You will receive a net payment along with a payslip for your own records, as you would with a regular employer.

    8. Tax payments

    Finally, it’s up to the umbrella company to process the money deducted from your pay for income tax and national insurance. Once a month, they will send the correct amount to HMRC on your behalf.

    Steps you should take

    If you’re ready to choose an umbrella company, there are also some steps to take yourself to make sure you get the right umbrella services for you.

    1. Background check

    Find out as much as you can about the umbrella company’s background. Check their credit rating and how long the company has been trading. Both of these are good indicators of how much you can trust a company.

    2. Check the fees

    Umbrella companies charge contractors a fee for their services, which can vary depending on the provider. Find out whether you will be paying weekly or monthly – and how much you’re paying.

    3. And what’s included…

    The cheapest umbrella services aren’t always the best. Some umbrella companies will charge extra for things like processing your expenses, while others will include benefits like statutory leave and sick pay as part of their fee. Consider the monetary value of these benefits when you’re comparing umbrella companies.

    4. Contracts

    Your umbrella company acts as a full-time employer, so you want to make sure you’re covered with a full contract of employment. This is where your statutory rights and benefits will be outlined, so it’s essential to check over before signing anything. Look for payment terms – when and how you’ll be paid – along with the process or penalties should you want to leave.

    5. Support

    Another key element in your umbrella service is the support on offer. Firstly, what are the umbrella company’s opening hours? Do you have a contact for outside-of-hours support? Contracting is far from a 9 to 5 lifestyle, so you’ll want to be able to contact them whenever you need assistance.

    Secondly, how are timesheets submitted? It may be useful if your umbrella company provides an online portal, making it easier to keep track of what you’ve submitted and do things when it suits you.

    Umbrella comparison made easy

    Umbrella Broker provides a quick and easy way for contractors to compare umbrella companies. We provide up to ten free umbrella quotes in under 2 minutes, so you don’t have to do the hard work.

    Need any assistance? Feel free to get in touch with our team.