Ideally, this should be the only factor differentiating one quote from another when shopping around every other deduction (NI and tax) is a standard rate dictated by HMRC rules. Typically they are between £15 and £25 per week. Umbrella margin – Umbrella fees are called “margin” most of the time, and these are a fixed amount per week or month. You can read about the benefits in detail by clicking here. ![]() Statutory benefits – maternity/paternity, sick pay, and holiday pay are all there like they would be with any other employment.They can advise on IR35 issues or choose the best trading vehicle for tax efficiency. Advice – years of experience helps umbrella companies help you.Discounts – through affiliations and partnerships, most companies offer discounts on personal tax services, mortgage, investment and pension advice some will even offer employee discounts on shopping.Online portal – established firms will have a client portal where timesheets and expenses can be submitted it will also hold all your contract documents, so everything is in one place.This alone can save you hundreds of pounds per year. Insurance – almost all umbrella firms will provide professional cover, so you don’t have to pay for a policy yourself.Pension – like all employers, umbrella companies will sign you up for auto-enrolment per government guidance many will offer other arrangements like salary sacrifice.Compliance – an accredited umbrella provider will be compliant, ensuring that your taxes are paid according to HMRC’s rules. ![]() Providing benefits – The margin deducted goes towards providing a range of benefits that makes the umbrella trading vehicle attractive:.Your umbrella employer takes all of this off your shoulders, making the necessary deductions and paying all your taxes over. Pay your taxes over – When you run your own freelance business, you have to remember to pay the correct tax and NI and submit a self-assessment return on time every year.– all that is taken care of when you are working through an umbrella company. Organising your income/taking over the admin burden – imagine the administrative burden of being self-employed, looking after invoicing, chasing non-paying clients, claiming expenses etc.The most practical and efficient way to do that is to take you on as an employee. You don’t work for them, but they work for you and organise your freelance income into a PAYE pay package. Why is there a cost to using an umbrella company?Ĭontrary to a traditional employer, umbrella companies provide a service. Yes, that’s true, but an umbrella company is not a traditional employer. If you are new to freelancing and just researching umbrella companies, you may wonder why a margin is deducted from your pay.
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