Working as a Contractor

One in seven workers in the UK choose to work for themselves; freelancing has become the preferred way of working for the very best talent in every sector.

Whichever way you choose to operate it is important to appreciate that running a business  is not simply working in a different way.

Once you set up a business you enter a whole new realm of laws and regulations. It is essential that you begin to think and act as a business, not just as a worker who is operating through a business set up for convenience.

Many freelance contractors are attracted by the low admin, fast setup option of using an Umbrella Solutions company.

The Umbrella Company Solution

The contractor is an employee of  the umbrella company (not the Agency).

We will therefore supply the worker (you) to the agency for a contract at the End User.

The benefit to the worker is that by being an employee of the Umbrella, he can claim travel and subsistence expenses that would not be available to an employee deemed to be based ‘onsite’.

The Umbrella charges the worker a fee for the provision of its service, but the worker is still better off than someone on PAYE as an employee of the End User.

The purpose of an Umbrella company is to make life simpler for contractors while maximising their earnings, by taking responsibility for administrative affairs and compliance on behalf of the contractor, and reducing the amount of tax that they pay.

An umbrella company scheme may be suitable for:

  • contractors starting up who expect to work through an agency for the foreseeable future
  • contractors who are “caught” by IR35
  • contractors who do not want the additional administration and finance hassle involved in running their own business and who are happy to hand these functions over to an umbrella company
  • contractors wishing to maximise their take home pay by leveraging Revenue dispensations for genuine, receipted expenses
  • new contractors who think that they may struggle with the responsibilities of running a company
  • short-term contractors who want to avoid the costly process of forming a company and then arranging for it to be dissolved
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