Umbrella Company Guides for UK Contractors 2025
Everything you need to know about working through an umbrella company
What is an umbrella company?
An umbrella company is a company that contractors can choose to work through as an alternative to setting up their own limited company business. The umbrella company acts as their employer, and as the intermediary between the contractor and their recruitment agency or end client. They handle all the administration and payroll, so it means you don't have to deal with any of the administrative tasks or responsibilities that come with running a limited company like accounting and taxes. The umbrella company will invoice your agency or end client, get paid for the work that you do, and pay you through PAYE, deducting costs like national insurance contributions and tax.
Why work through an umbrella company?
Contractors may choose to work through an umbrella company for a number of reasons. They are beneficial for when you are first starting out as a contractor, as it is more straightforward than setting up and running a limited company, which can be a little confusing when you first set out. Similarly if you are only planning to contract for a short amount of time. An umbrella company is the simpler option; you don't want to go through the process of setting a limited company only to have to dissolve it in the future. You might also choose to work through an umbrella company if you are working on a contract which is inside IR35, as the tax benefits of working through a limited company in this scenario can be reduced and the administration increased. You may even find that in some cases your recruitment agency or end client specify that they will only work with you through an umbrella company now due to IR35 reform.
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What is an umbrella company?
A contracting career does not necessarily mean flying entirely solo. For many, an umbrella company represents the ideal balance between the independence of the contractor and the convenience of the employee.
BasicsHow do umbrella companies work?
Understand what an umbrella company is and the process of working one.
BasicsShould I use an umbrella company?
Find out what an umbrella company can offer and whether it's for you or not.
BasicsWhat are the benefits of using an Umbrella company?
Knowing the pros and cons of operating under an umbrella company can help you to make an informed decision as to the best business model for your contracting career.
BasicsUmbrella companies: what their detractors don't want you to know
Myths about umbrellas are still being peddled, by their critics and impersonators.
BasicsThe pros and cons of using an umbrella company for contractors
An overview of the benefits of brollies, and the many (many) aspects to beware.
BasicsUmbrella or PAYE: what is the difference?
How Pay As You Earn through an umbrella company differs from through a recruitment agency.
BasicsWhat comes first when using an umbrella company, then second, third, fourth and so on
A 10-step umbrella company functionality manual, in order of doing, for users.
BasicsHow to get more out of your contractor umbrella company
Amid more contractors regarding 'Ltd' as limited, here's nine ways to ensure umbrella contracting works for you.
BasicsWhy do recruitment agencies use umbrella companies?
Admin, insurance, records and even peace of mind. Just some of the reasons staffing firms tie-up with brollies.
BasicsHow to set up a UK umbrella company
The top 10 considerations when setting up an umbrella company for contractors.
BasicsUmbrella companies in 2023: what's in store for contractor payroll firms
The FCSA, Professional Passport, Parasol, SAW Consulting and Clarity Umbrella do some crystal ball gazing for ContractorUK readers.
Compliance & SafetyHow contractors can spot and avoid a non-compliant umbrella company
Four big clues on when providers shouldn't be touched with a bargepole.
Compliance & SafetyUmbrella companies – what good should look like
Five traits of a best-practice brolly, so you can tell if your umbrella is worth holding on to (or not).
Compliance & SafetyWhat is salary skimming and how does it hit umbrella company contractors?
A rundown on the inappropriate practice at the centre of allegations against one of the sector's well-known umbrellas.
Compliance & SafetyGross Payment Model, the clear and present risk for contractors' agencies and end-clients
A bypass to inside IR35/OPW payment processes has emerged – with potentially lethal HMRC consequences for agencies and end-clients.
Compliance & SafetyCowboy or compliant? How to spot a straight-shooter umbrella company
With IR35 reform on the horizon, the good, the bad and the ugly brollies are out in force.
Compliance & SafetyHow to guard against salary skimming when using an umbrella company
What payslips need to look like, contain and not include, to help ensure you're getting every penny that you're due.
Compliance & SafetyTop 10 signs of umbrella company compliance
What contractors can look for to work out if a brolly is worth it or worrying.
Compliance & SafetyContractors, this is NOT a dodgy umbrella company
Payments, pensions and deductions not being to your liking doesn't (always) mean they're unlawful.
Compliance & SafetyRevealed: the dodgy activities of umbrella companies which warrant regulation
'Beware of brollies bearing gifts' -- and other tips for agencies and contractors hoping to shut down the underhand umbrellas.
Compliance & SafetyTop 5 umbrella company 'due diligence' steps for contractor recruitment agencies to take
With an HMRC 'due diligence' requirement on recruiters all but incoming, these five umbrella vetting steps are both timely and seminal.
Compliance & SafetyWhat is real-time forensic auditing of umbrella companies?
An explainer on the new technology designed for workers and agencies to ensure their umbrella company is compliant and safe.
Compliance & Safety5 questions contractor recruiters should ask umbrella companies
What queries your agent should be posing to feel out if a brolly is bonafide.
Pay & PayslipsUnderstanding umbrella company pay: A guide for contractors
Knowing your payslip's ins and outs is paramount -- to ensure both proper pay and no impropriety.
Pay & PayslipsUmbrella company payslips: here's what every contractor must see
Rate, deductions, conversation, and IR35. And possibly explorable in that order -- if you want to avoid nasty surprises as an umbrella employee.
Pay & PayslipsHow umbrella company contractors can understand their payslip
Overview of the staple document when being paid through an umbrella company.
Pay & PayslipsWhat details SHOULD a contractor payslip include to be compliant?
A seven-point checklist to refer to -- for umbrella contractors with doubts about their payday document.
Pay & PayslipsUmbrella payslip: how should contractors check it is correct?
Reviewing your payslip and pay report is a must when you work through an umbrella company.
Pay & PayslipsWhat are 'employment costs' when contractors use an umbrella company?
A refresher on one of the key terms on your payslip -- still being bandied about the umbrella market.
Pay & PayslipsWhy umbrella contractors switching from a limited company rate need a 23 per cent uplift
Get past the irritation of numerous variables, and PSC-to-brolly-rate considerations are worth a look; maybe even a conversation.
Pay & PayslipsUnpaid by an umbrella company? Here's what contractors should know
What to do if your umbrella company hasn't paid you on time.
ChoosingHow to choose an Umbrella company?
What should contractors be looking for from an umbrella company?
ChoosingCompare umbrella companies – a contractor's guide
How comparing umbrella companies can fetch you the best deal, and what to look out for.
ChoosingTop 10 tips for choosing an umbrella company
What contractors should ask to work out which PAYE brolly is best for them.
Choosing10 questions to ask when choosing an umbrella company
Make the umbrella company selection process less daunting by posing these ten queries.
ChoosingWhat are the costs and fees of an umbrella company?
Typical pricing structures, average fees, extra costs and red flags for umbrella companies.
Pensions'Salary-Sacrifice' pensions and umbrella companies
How to understand salary sacrifice pensions as an umbrella company worker.
PensionsContractor guide: umbrella company pensions
An overview to building a nest egg through a contractor umbrella company.
PensionsWhat is the best pension via an umbrella company?
When working through an umbrella company, here's how to secure a nest egg that can pay dividends for you.
PensionsHow umbrella company returnees on inside IR35 contracts can make Spring Budget's pension changes work for them
Another £9,000 thanks to the chancellor could well inspire IR35-hit contractors back into the fold, even via brolly roles caught by the legislation.
PensionsWhat pension auto-enrolment means for PAYE contractors
Parasol demystifies 'We're all in' for contractors direct to an agency or umbrella.
ExpensesUmbrella contractor expenses guide to Supervision, Direction or Control
Now you've gone brolly, recap what 'SDC' means for your expenses as an umbrella employee.
ExpensesUmbrella company expenses rules: explainer
Despite some quick and shrewd learning from HMRC, the law in 2024/25 still doesn't entirely prohibit expenses claims.
ExpensesTop 5 umbrella company expenses things to still do in 2024 under 2016's T&S rules
A recap of the brolly 'D-Day' eight years ago, ahead of another (potential) upending this coming Wednesday.
ExpensesWhat is an Umbrella company dispensation?
What a dispensation is and why you can only claim for expenses you can prove you've incurred.
BasicsA contractor's guide to umbrella company contracts
Get to know the four key contractual sections that form your agreement with an umbrella company.
BasicsOne timesheet or two? That's the question umbrella contractors should answer in a flash to avoid faff
To head off frustration, duplication, and worse -- late payment, one is the magic timesheet number.
BasicsContractor guide to umbrella company sick pay
Know your rights to Statutory Sick Pay as an umbrella contractor, but get clued up before you fall unwell.
BasicsUmbrella guide to maternity rights
The practicalities of claiming maternity pay from an umbrella company.
QuestionsDoes HMRC's 24-month rule apply to umbrella company contractors?
Overview of the two-year rule for a contractor hoping that he's not caught.
QuestionsWhat should my umbrella company take-home pay be?
How much contractors can get paid if they work via an umbrella, now or post-IR35 reform.
QuestionsWould umbrella contracting in the same skill scupper my Entrepreneurs' Relief claim?
Cancelling salary, and then even the company, looks the safest tax path for a cyber security expert.
QuestionsAre new AML regulations a threat to umbrellas?
'Brollies can indeed pose a money laundering risk, but no need to register with a supervisory body.
QuestionsDo new anti-money laundering rules catch my umbrella company?
Nothing for UK-compliant brollies to fret over, thanks to a tailor-made exception.
QuestionsDo umbrella companies have to offer insurance?
Expert guidance on insurance requirements for umbrella companies.
QuestionsWhy's my agency want me to move umbrella?
A new tax evasion offence may be behind a 'request' to close your brolly.
QuestionsCan the agency refuse to pay my brolly?
Expert aid for a contractor whose recruiter doesn't like the cut of his umbrella's jib.
QuestionsContractors' Questions: How to handle personal allowance clawback on adjusted net income over £100,000 via an umbrella company?
Salary-sacrifice and 'relief at source' are the pensions options for an umbrella contractor stung by an unexpected £4,000 tax bill.
QuestionsContractors' Questions: Can I expense travel costs via an umbrella company, when visiting a client now and again?
Tax relief tips for an 'ignorant' contractor, whose goodwill is eligible for -- and deserving of -- modest reimbursement.
QuestionsContractors' Questions: How to get my Intellectual Property protected when IT contracting via an umbrella company?
A would-be limited company contractor is right that umbrellas are not interested in his IP goals, and nor should they be.
QuestionsContractors' Questions: Is my umbrella company fobbing me off on expenses?
An umbrella suspected of putting a contractor's expenses on the 'too difficult' pile simply needs to use a little-known mechanism, 'YEA FPS.'
QuestionsContractors' Questions: Is my brolly right to deduct two lots of NI?
Ex-inspector probes why umbrella users contribute as both employee and employer.
QuestionsContractors' Questions: Is brolly PAYE the same as agency PAYE?
How Pay-As-You-Earn fluctuates between umbrellas, recruiters and end-users.
QuestionsContractors' Questions: How to keep contracting if agency work is on hold?
Umbrella opens up about pay, to a PSC stuck with short contracts requiring overnight stays.
QuestionsContractors' Questions: Can an umbrella pay into my private pension?
Payroll expert provides top tips to a contractor wanting to stick to what they know.
QuestionsContractors' Questions: Will a brolly be better than 'Ltd' for public contracts?
Agencies are among the many forces making umbrellas the favourable option.
QuestionsContractors' Questions: Can brollies take unused expenses out of pay?
April rule changes let umbrellas swallow leftovers from your food expenses pot.
QuestionsContractors' Questions: Can my umbrella take unclaimed deducted holiday pay?
Legal support (but no leg to stand on) for a contractor feeling conned out of £1,200.
QuestionsContractors' Questions: How to prove I'm not Supervised, Directed or Controlled?
What contractors can do, practically, to stand a chance of passing HMRC's SDC test.
QuestionsContractors' Questions: Is my umbrella company ripping me off?
What comes out before and after is making one salaried IT contractor feel cheated.
QuestionsContractors' Questions: Is this new model of umbrella company safe?
One brolly's offer of a small salary and the rest as a loan has a number of issues.
QuestionsContractors' Questions: Is an 'alternative' brolly worth it or worrying?
A University of Life graduate and ex-taxman advises a wary contractor.
QuestionsContractors' Questions: Can I rely on my brolly's basic insurance?
Speaking to his umbrella is best for a contractor wondering if he's covered.
QuestionsContractors' Questions: Who claims expenses if the brolly delayed my start?
Not being under the umbrella when he worked means one IT contractor's costs aren't covered.
QuestionsContractors' Questions: Are my agent and umbrella acting legally?
A newbie contractor gets much-needed reassurance over PSLs and holiday pay.
QuestionsContractors' Questions: Can I claim Right To Work postage costs?
Costs you incur to help your umbrella run RTW checks are claimable.
QuestionsContractors' Questions: Who's at risk if HMRC rejects my expenses, the umbrella or me?
Contractors will take the heat if their personal income tax relief isn't allowed.
QuestionsContractors' Questions: What's an overarching contract of employment?
Expert reassures a new IT contractor not liking the sound of an employment contract.
QuestionsContractors' Questions: Will RTI affect umbrella company contractors?
'There's a plus to HMRC having your full employment history from April.'
QuestionsContractors' Questions: Will an umbrella let me claim the same expenses?
Explaining the differences between claiming expenses via a limited company and an umbrella company.
QuestionsContractors' Questions: Which umbrella payment model is under attack?
Brolly contractors who want pay and expenses have three options – not all of them recommended.
QuestionsContractors' Questions: Can my agency insist on their umbrella?
Expert advice for IT contractors forced to use their agency's preferred umbrella.
QuestionsContractors' Questions: Do my decisions on travel affect tax relief?
How far HMRC can deny tax relief for expenses on the basis of personal choice.
QuestionsContractors' Questions: Can I claim if a short gig ends up lasting 25 months?
Expenses aid for an IT contractor whose expectations about contract length are prone to change.
QuestionsContractors' Questions: Do umbrellas cover interview expenses and maternity leave?
What IT contractors can and can't expect umbrella companies to take care of.
QuestionsContractors' Questions: Am I due tax relief on mileage?
Umbrella company contractor stuck on what address to give HMRC.
QuestionsContractors' Questions: Is my agent's umbrella mandatory?
Legal aid for a limited company IT contractor told to use his agent's umbrella company.
QuestionsContractors' Questions: Can I beat the 24-month rule?
Taking a break doesn't normally get round the rule on contractor expenses.
NewsWhat contractors can take from the Industria Umbrella Ltd case
A foreshadowing of JSL that emphasises the purpose of the April 2026 rules also appears to reveal when a penalty isn't truly a penalty.
NewsWhat Harpur Trust v Brazel means for umbrella companies and their contractors holiday pay
In a landmark ruling for the umbrella sector, it's officially 'out' with the pro-rating holiday pay formula of 12.07%, and 'in' with the 5.6 weeks' calculation.
NewsFCSA waters down umbrella company code, settling for 'reasonable effort' on contractor holiday pay
Accreditation body backtracks on banning brollies from pocketing accrued pay, in what's being described as an 'open-and-shut case of the tail wagging the dog.'
News'Comical' directorship ban for umbrella company boss Adrian Sacco condemned
Disqualified for eight years, not a lifetime, experts say the director of Best Employment Services 'got off lightly.'
NewsQueen's Speech ignoring Single Enforcement Body puts onus on Labour Market Enforcement Director to act on umbrella companies
With the government excluding an employment bill amid 'rife' non-compliance, it's left to Margaret Beels to do what ministers 'unsurprisingly' are shirking.
NewsContractor umbrella company cloning 'getting worse'
Amid more imposter companies registering with Companies House to commit fraud, one victim fears the end isn't even in sight.
NewsTreasury response to umbrella company call for evidence 'will be brutal for the FCSA'
Fresh from clearing JSA, the compliance group is told of 'a lot, lot more' to come than just a holiday pay pocketing allegation.
NewsFCSA calls on government to stop umbrella company cloning
Trade body wants a multi-organisational response to 'strike off the clones' and 'pursue the perpetrators.'
NewsNational press covers umbrella companies falling victim to Companies House cloning
The Mirror reports on the contractor sector's new fraud, with serious implications for 'brollies and their users' not being prevented by the BEIS agency.
NewsPut Single Enforcement Body to regulate umbrella companies on a timetable, Treasury told
The brolly call for evidence is answered with 'naming and shaming,' dates and outright bans.
NewsUmbrella companies at risk over holiday pay ruling in Smith V Pimlico Plumbers
The death knell is being heard for some brollies in wake of a court verdict which, for once, favours contractors.
NewsContractors use intermediaries to tell HM Treasury about umbrella companies
IPSE, JobsAware and LITRG are helping officials get the hard evidence on brollies that they need.
NewsCall for evidence on umbrella companies echoed, as cloning spreads to comparison sites
Contractors specifically asked to respond to HM Treasury's call on the brolly sector, even if it is overdue.
NewsGovernment calls contractors to give evidence on umbrella companies
Unexpectedly, HMT gives ContractorUK readers a chance to help shape the future of brolly regulation.
News'Usefulness' of HMRC's umbrella worker avoidance tool thrown into doubt
The feedback form for the beta service looks likely to be mixed, as division over the risk-checker continues.
NewsHMRC hands umbrella contractors new avoidance 'risk-checker' tool
Government keeps 'doing nothing but publishing some guidance,' but a new Revenue three-parter is hailed as a 'must-read.'