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How to find the best umbrella company in the UK

new career advice: finding an umbrella companyWritten by David Webster

Freelancers and contractors are well aware of the value and importance of professional help from umbrella companies in managing background administrative tasks related to multiple assignments and clients they usually handle.

Given the number of factors to be considered and the myriad of service providers available in the United Kingdom, it is an arduous task to decide on one best umbrella company in the UK. Instead, one can always evaluate the services of the umbrella company on certain specific parameters and arrive at a conclusion on how best the firm can address specific requirements. Below are some business tips to help you choose.

Legal Compliance

One of the top requirements is of course legal compliance with all the guidelines and processes set forth by HM Revenue and Customs (HMRC). Freelancers will have to look for proof of compliance in terms of audit reports from reputed firms such as Lawspeed and Professional Passport that conduct compliance audits each year on various umbrella companies. Tax-free expenses, offshore benefits as well as foreign currency payments and loans will have to be carefully considered before opting for a suitable scheme with an umbrella company.

Charges

Umbrella services are subjected to fixed fees that are automatically deducted by the firm when the payments are cleared. Freelancers can opt for firms that charge a fixed monthly or weekly admin fee. Administration charges, however, should not include any additional entry or exit fees. Charges are usually quoted as a percentage of either the gross or net earnings and will have to be accordingly compared when evaluating competitor charges to determine the amount that is worthwhile as a small business expense. Finding work for you should definitely be worth the amount.

PAYE

Pay-as-you-earn schemes usually treat the freelancer as an employee of the umbrella firm, crediting earnings to the freelancer account after deductions of taxes, NIC and admin charges at source. However, genuine expenses can be legally reclaimed as a part of the services offered. Avail PAYE scheme to steer clear of all legal complications, after of course careful consideration of the terms and conditions is done.

Payment Processing

The time taken for invoicing, payment collection and crediting the earnings is also a crucial factor to be considered while evaluating service levels of an umbrella firm. Prompt and smooth handling of documents and processes are factors that work in favour of the umbrella firm. Flexible payment options and about a week’s processing time is considered quite ideal in most cases.

Benefits

Admin charges usually should include basic insurance cover such as Professional Indemnity and Public & Employers Liability Insurance. Accident cover, health, pension and child care voucher schemes are a welcome addition. Sick and earned leave reimbursements too are a part of the services offered by umbrella firms.

Recommendations

Despite all factors working in favour of an umbrella firm, it is important to validate the credibility and reputation of the umbrella service firm. Recommendations and references from various sources should be carefully scanned before opting for the services.

With several hundreds of umbrella firms operating in the United Kingdom, the choice is quite difficult and confusing at times. However, umbrella review websites are an ideal point to start the search for the best umbrella company when immediate help is not available from other sources. Sites such as Freelance Supermarket, Umbrella Detective and Contractor Supermarket offer extensive reviews, which can help short list a few firms that one can be further explored first-hand to arrive at a final decision.

David Webster has worked at Dasa Consulting Ltd. in Borehamwood, England since 2008. He currently deals with IR35 issues in their contractors accountancy department. David studied finance at university and is currently studying to take an ACCA qualification, he hopes to go on and become a chartered accountant. Want to write for Creative Agency Freelancing?

Photo credit: Rev Dan Catt via Flickr cc

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About Greg Dillon

Greg is the founder of strategy consultancy GD | Inspires and spends his days strategising for various design agencies and clients around the world - see more at http://gdinspires.com. He is also a prolific entrepreneur having launched Strat-Talking.com - a website aimed at giving advice and insight to new, existing and veteran freelancers as well as commenting on all things strategic as well as acquiring CreativeAgencyFreelancing.com for designers. Feel free to email him at: greg@gdinspires.com or follow on Twitter @CAFreelancing.

2 comments

  1. Ah, a great review, nice job. Many contractors find it a hard task to file their tax returns when they want to spend most of their time working on their contracts. A good Umbrella company can easily get them out of this tight spot, and cut down the taxes they pay to the government.

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