Umbrella Company Services FAQ
Frequently Asked Questions
If you are looking to use the services of an umbrella company you probably have few questions, and below we try to answer the most common queries people have.
When working via an umbrella company you become an employee of the umbrella company. Each week or month you submit timesheets to them, and the umbrella company then generate and send an invoice to the agency or client.
An umbrella company will absolutely be the best option for you if:
- You need a quick and easy start up in the world of contracting.
- You require a cost effective management solution for short term or fill in contracts whilst between permanent jobs.
- You are caught by IR35 or simply want to remove the threat of IR35.
- You are looking for a simple, safe, cost effective compliant contractor payroll solution.
- You are worried about being caught by disguised self employment legislation.
- You want to ensure that you pay the correct taxes.
- You are worried about the implications and legal responsibilities of running a Ltd Company.
- Your client wants you to start immediately.
- You don’t have time to administer a Ltd Company.
Yes, you will need to submit an approved timesheet to the agency, or the client if the contract is direct with the end user.
In addition you will need to submit your time information to us, so that we can raise the necessary invoices to ensure that you are paid on time.
An umbrella company will take care of all the tax and administration burdens associated with running a limited company. Contractors are then free to enjoy the many benefits of working as flexible employees throughout their contracting careers.
- Easy to set up and use.
- Reduced administration.
- No need to set up a limited company.
- No need to set up a company bank account.
- No need to employ the services of an accountant.
- No need to raise invoices and chase payments.
- Perfect for short term or fill in contracts.
- Ideal for lower paid contractors.
- No IR35 or disguised self-employment issues.
- Insurances are included.
When working as a sole trader, contractors will need to register for Self Assessment and complete a tax return each year. The contractor will need to pay pay Class 2 & 4 National Insurance and Income Tax on the taxable profits of the business.
As a self-employed sole trader the law sees you and your business as one. This means should your business fall on hard times and find itself in debt, you as the business owner will be liable. If the business is declared bankrupt, your personal assets are on the line. This also applies if a customer sues your business. In the eyes of the law, they’re suing you.
This method of working presents the most risk to contractors, but also to agencies and clients who are concerned about transfer of debt.
Limited company contractors can achieve the most tax efficient way of working, and are able to retain more of their income. However, these tax advantages are wholly dependent on whether ones circumstances fall inside or outside of the IR35 “rules”.
By setting up a limited company, contractors as Directors of their own limited company, will have complete control of running the company and its bank account.
If a contract falls outside of IR35 (i.e. the contractor is not deemed to be an employee of the client using the wrapper of a limited company as a disguise for self-employment) then contractors can draw dividends from the company that are not subject to National Insurance contributions after corporation tax has been accounted for. This can provide the contractor with a more tax efficient way of working.
Following the introduction of the disguised self-employment legislation, contractors will find it even more difficult to operate as a limited company particularly via agencies who are concerned about the transfer of debt liability.
- Providing you are not caught by IR35 or disguised self-employment legislation this is the most tax efficient way of working.
- Personal liability is limited.
- Personal finance is separate from the company, so you’re protected if the business fails.
- You are responsible for all statutory filings of the company.
- You are responsible for the companies payroll liabilities including PAYE and VAT reporting.
- You need to source your own insurances.
- You will need to raise and send your own invoices to the client.
- You will have to chase your own invoice payments and deal with all credit control aspects of the company.
- Many contractors will be caught by IR35 or by the disguised self-employment legislation (i.e. will not pass the tests for self-employment).
No, not at all. At goaccounting we work directly with many end user clients from small boutique businesses to large multi-national corporations. All we need is a point of contact and you’ll be up and running in no time.
Yes, you can transfer your existing pension plan across to goaccounting.
Simply let us know the contact details of the account manager at the Pensions Provider, and how much you wish to contribute each week or month, and we will do the rest.
Typically, weekly paid employees will be required to submit timesheets at the end of the working week and monthly paid employees at the end of the month.
However, this can vary from one worker to the next and is dependent on the contract terms. So, actual deadlines can only really be determined once the terms of the formal contract assignment have been agreed.
Timesheets can be submitted via the following methods:
via the ‘timeonline’ portal: https://time-online.goaccounting.co.uk
This is our preferred method, and login details are issued at the point of registration.
Go Accounting Ltd.
140 High Street
at the following email address:
IR35 applies to engagements where a worker provides services under a contract between a client and an intermediary; and not withstanding the presence of the intermediary, the income would have been Schedule E income of the individual performing the services.
Anyone supplying services to clients through an intermediary could be caught by IR35.
If you are caught by the rules and regulations you will have to undertake an assessment for each tax year in which IR35 was deemed to apply.
If that assessment shows that there is a deemed payment due, Schedule E tax and NIC will be applied to that ‘deemed payment’.
The rules will not apply where the worker only receives income from an intermediary in a form which already falls within Schedule E and Class 1 NIC. This is the category in which you would fall into, should you join goaccounting.
These are regulations which arise out of the European Agency Workers Directive. They came into force on 1 October 2011 and give temporary agency workers the right to the same pay and working conditions that they would have been entitled to had they been directly employed into the same role by the hirer.
Yes, so long as you are able to fulfil the requirements of each role, then you are free to work on as few or as many temporary contract assignments that you want.
Just let us know the contact details of the person in charge of HR and we will make sure that each contract is set up quickly and efficiently.
You will be paid once per pay period and this will include all income generated by the various clients for whom you have provided services for during that pay period.
Unless you currently complete a self assessment, then no. As a full time permanent employee of goaccounting being paid fully under PAYE, there will be no requirement for you to register and/or complete a self-assessment tax return.
In a permanent position it would be the company employing you that would be liable for the cost of Employers NI.
When working via an umbrella company it is no different; the Employers NI would still be due on your assignment income.
When working through an umbrella company the rate of pay offered by the agency for the role should be adjusted to cover this.
We will pay you the same day funds clear in to our bank account. All payments are processed via fasterpay, therefore your salary will also clear in to your account that same day.
goaccounting’s standard gross margin is just £27.50 per week. The gross margin is tax deductible, and therefore attracts tax relief, which will provide a tax saving.
Our discounted weekly margin is just £11.99 per week worked, this is a reduction of over 50% from our standard margin! This is a fully HMRC Compliant PAYE Umbrella service for just £11.99 per week worked, and is valid for the duration of your employment.
It is important to note that some of our published margins may already factor in the cost of the tax relief. These figures therefore may be different to those that we account for from the gross margin shown on our invoice reconciliation breakdowns, as those published figures illustrate the net cost of our margin after tax relief has been applied, unless stated otherwise.
For example, a high rate tax payer who’s contract assignment attracts a reduced gross margin of £11.99 per week will attract tax relief that will result in a tax saving of as much as £7.87 per week. This means the true net cost of our margin can be as little as just £4.12 per week.
In circumstances where a variable or reduced margin applies, goaccounting’s standard margin will take precedence when processing ALL outstanding periods of an assignment once it becomes known that the contract with the hirer will terminate or is likely to terminate.