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What are the benefits of using an umbrella company?

Is working through an umbrella company right for you?

Deciding whether to work through an umbrella company, agency payroll or a limited company can be confusing, however finding the right option for you is not just about what you want to do but it is also dependent upon your circumstances. For instance, if you fall inside the scope of the IR35 legislation then working as an umbrella company contractor is the best solution for you.

Advantages of working through an umbrella company

  • It’s one of the most hassle free ways to work as you can be set up with an umbrella company service provider in a matter of minutes.
  • Umbrella companies are ideal for short term contracts or if you are new to the world of contracting.
  • Staying with the same umbrella company gives you continuous employment which is important when applying for mortgages.
  • There are no unexpected tax bills as your umbrella company makes all the necessary PAYE and NI deductions for HMRC.
  • PayStream's My Max umbrella service allows you to make contributions into your personal pension plan via salary sacrifice. Saving you £100s each month in both PAYE and NI contributions, whilst still preparing you for your future.

Disadvantages of working through an umbrella company

  • Working through an umbrella company is not as tax efficient as working through a limited company.
  • Some "dodgy" umbrella companies might advertise rock-bottom margin but rack up hidden costs – such as fees for same-day payments, providing a reference or even issuing your P45 at the end of the contract.
  • Some "dodgy" umbrella companies may tell you that you can claim tax relief on travel to work expenses with no tax consequences. Be wary of these suggestions because in most cases working through an Umbrella Company you are likely to be acting under supervision, direction and control and as a result are unlikely to be able to claim for many, if any expenses. 

What are the benefits of working through an umbrella company?

Our Lead Accountant, Vicky Knight, quickly explains what benefits you'll have by choosing to work through an umbrella company.

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Umbrella Company

PayStream's My Max umbrella service

Agency Payroll

Pay As You Earn (PAYE)

Ability to claim tax relief on allowable business expenses as they are incurred
Continuous employment across all your contracts if working with multiple agencies
Ability to supports contributions into your personal pension through a salary sacrifice arrangement
One pension pot across all of your contracts if working on multiple agencies
Employed under a contract of employment
Access to statutory sick pay
Access to statutory maternity or paternity pay
Access to statutory adoption pay
Access to comprehensive insurance package of employers liability, public liability and professional indemnity
Access to employee rewards scheme
One workplace pension pot across all of your contracts if working on multiple agencies
Access to statutory bereavement leave
Access to statutory shared parental leave
Access to Online GP service at discounted price
Access to Personal Accident cover at discounted price

Umbrella Company VS PAYE: what's the difference?

Let's compare both options

Try our new umbrella take home pay calculator

We'll give you a quick estimate of how much you can expect to take home on a weekly or monthly basis.

Calculate your take home pay

What expenses can you claim through an umbrella company?

Let's take a look

My Max umbrella offers contractors that little bit extra

See what benefits you can enjoy as one of our umbrella employees in this handy infographic.

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Maggie's first steps into umbrella contracting

Maggie recently decided to enter the world of contracting and found that her role fell inside IR35, meaning she had the choice of agency payroll or an umbrella company. Maggie chose the umbrella company route and decided to work through PayStream’s My Max umbrella service. We asked her how she found the set-up process and how life has changed since becoming an umbrella contractor.

Download the case study >

How to spot a dodgy umbrella company

With so many different umbrella companies out there, all promising different levels of take-home pay and different levels of service, how do you know which ones you can trust? In this article our we guide you through how to spot the heroes from the villains.

Things to look out for

Have another question for us?

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Ready to get paid the easy way? Get your umbrella company quote today

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