Blog post written by Contractor Umbrella
Joining the self-employed sector is a massive decision for many people – often described as being as equally challenging as it is rewarding!
But there’s more than one route to consider and for many, they will find that contracting through an umbrella company works much better for them and has additional benefits that you won’t find working as a sole trader or limited company contractor.
Are umbrella companies necessary?
In short, yes! And that is because there are so many people who will find that this route suits their lifestyle much better than if they were to become a limited company contractor or sole trader.
It can be particularly appealing to those who have just left permanent employment and are new to the contracting world, as it isn’t quite as much of a leap compared to other avenues, and offers the added security found with traditional employment.
An umbrella company is ideal for those who wish for more flexibility with a better work-life balance, but aren’t interested in the hassle and admin headache found with other self-employed routes, such as having to complete an annual self-assessment tax return and ensuring that you’ve paid the correct amount and type of tax.
What are the benefits of working through an umbrella company?
As mentioned previously, a huge advantage of being employed by an umbrella company is that all tax liabilities are worked out for you and automatically deducted from your payslip.
Here are a few other benefits that come with working through an umbrella company:
Higher rates of pay
With the power to negotiate your own rates of pay, contractors will often be paid a higher daily/weekly/monthly rate compared to those working as a permanent employee.
There’s also the fact that you have the freedom to pick and choose your preferred contracts and decide when you want to work so it fits into your lifestyle.
Employee benefits
An umbrella contractor essentially has the best of both worlds; being entitled to the benefits (and therefore security) seen in permanent employment but with the flexibility of a contractor.
Those employed by an umbrella company are entitled to:
- Statutory maternity and paternity pay
- Sick pay
- Annual leave
This is calculated based on the hours you work.
Not having to worry about IR35
As an employee of an umbrella company, you won’t need to worry about IR35 – a legislation that has certainly caused issues for so many self-employed workers due to how difficult it can be to determine a contractor’s status (especially now that it is the responsibility of the end client to decide whether a contractor falls ‘inside’ or ‘outside’ IR35).
Fortunately, Umbrella contractors are unaffected by the legislation due to being treated the same as a permanent employee.
Contractor Umbrella
Hassle-free and straight talking, Contractor Umbrella has been helping contractors since 2002 and is now one of the most trusted umbrella companies in the UK guaranteeing peace of mind, absolute compliance and complete security for all its employees.
Award-winning, Contractor Umbrella is one of the longest-standing and most respected umbrella companies in the UK and is both fully FCSA accredited and an APSCo Trusted Partner