FAQ’s

Yes, this allows us to offer the best range of current products. An Umbrella Broker is a company that will seek to find the best umbrella company for your specific needs. Most employment agencies that you deal with for contracting assignments will give you a PSL (Preferred Supplier List) to pick from, however, this doesn’t necessarily mean that any of the Umbrella products will be what you are looking for.

Best PAYE as an umbrella broker will have a conversation with you to find out what you are looking for and then offer you a quote from our panel of umbrella companies that will best suit your needs and is 100% unbiased.

Umbrellas are actually one of the most common options for contractors because of how easy they make things for you.

While limited companies need to be set up and run by contractors, umbrella companies simply hire contractors as pay-as-you-earn (PAYE) employees. You are added to the payroll of the umbrella company and pay a fee to them. For this fee, they take care of all your administrative and financial duties – like a permanent employer.

They will provide statutory rights like insurance and paid leave. They’re also responsible for paying your taxes, so any money you receive is your take-home pay. However, unlike a permanent employer, your umbrella company won’t set you to work. You can take on contracts as normal, focus on work and leave the administrative work to them.

Umbrella companies are a great option for contractors who want to keep things simple. They take the administrative burden of invoicing, payroll and tax away from you, giving you a final sum of ‘take home pay’ every week, or month.

Due to changes in IR35, having a limited company isn’t possible for everyone. If you work under the direction of control (you have a manager) then legally speaking you would have to use an Umbrella Company as opposed to using a Limited Company.

The IR35 legislation affects all public sector contractors who have to report to someone. If you are within this category of contractors then as of April 2016, all contractors will be legally obliged to use an Umbrella company for their payroll solutions. The HMRC brought this ruling also into the private sector in April 2021.

In the UK, an umbrella company directly employs contractors and freelancers who work inside the IR35 regulations. Generally, an umbrella company’s services are administrative and accountancy-based – such as managing timesheets, calculating PAYE tax and NI contributions, invoicing the client, collecting monies and paying the contractor.

An umbrella service gives you legal employee status and handles all the paperwork. It’s the simplest solution for most contractors, with no unexpected tax bills and because you have one continuous employment it’s much easier to secure important things like loans and mortgages too.

Best PAYE will not charge a fee to any candidates. We already have agreements set in place with the umbrella companies that we work with. Using the services of Best PAYE will not affect the take-home quote provided.

An umbrella company exists to provide an employment platform for contractors and freelancers who work inside the IR35 regulations on one or more fixed-term contracts.

If your contract falls inside the IR35 legislation it is likely to be the only alternative solution to PAYE direct engagement with your end client or agency. An umbrella company is ideal for short-term contracts or your first time in the world of contracting. Staying under the same umbrella gives you a continuous employment record and the right to statutory employment benefits.

Yes, as well as being entitled to Holiday Pay, if necessary, you can claim Statutory Sick Pay. You will also be entitled to Statutory Maternity or Paternity Pay as appropriate. The National Insurance Contributions you make will help secure other state benefits including the State Retirement Pension.

All umbrella companies must comply with tax and employment laws. There are several independent organisations that accredit compliant umbrella companies to ensure adherence to and promote best practices. Best PAYE work with multiple umbrella products that hold the appropriate levels of accreditation.

No. An umbrella company is designed for contractors who are working within IR35 but have chosen not to join an agency payroll or become direct employees of an end client.

No. Although you may be regarded as a contractor or freelancer both your employment and tax status, is that of an employee of the umbrella company. This is in contrast to a worker who operates as a sole trader or through a limited company (outside IR35).

As an Umbrella contractor working you will fall into one of two categories: working under Supervision, Direction or Control (SDC) of either the client or the agency or not. Depending on which category you fall into will determine how and what you will be able to claim tax relief on.

General Expenses:

Even though you are working under SDC, there are still expenses that you may be able to claim directly from HMRC. There is a potential to claim tax relief for the following expense types, provided that they are incurred wholly, exclusively and necessarily in the performance of your employment duties:

• Uniforms and work clothing
• Tools
• Professional fees/ subscriptions
• Business telephone calls
• Computer hardware/ software
• Working from home allowance

Detached duty or inter-site travel:

If you have a regular workplace, but you are sent by the same client to work temporarily at another location (known as detached duty travel or inter-site travel) then HMRC may allow you to claim a tax deduction in respect of travel and subsistence expenses incurred whilst travelling to that temporary workplace.

An easy way to look at this is that you will be allowed tax relief in the same way as a permanent employee on the site would if he or she was sent to a temporary workplace. Furthermore, all expenses must be incurred wholly, exclusively and necessarily in the performance of your employment duties. Umbrella contractors can record details of any expenses they incur that are allowable in accordance with HMRC rules on our portal or phone app.

The type of expenses that you may be able to claim when travelling to a temporary worksite are:

• Mileage and associated costs (tolls, parking, etc.)
• Public transport (bus, train, taxi, airfares, etc.)
• Car hire and fuel costs
• Accommodation (hotels, B&Bs, rental properties and utilities, etc.)
• Meal expenses (evening meals, lunch, breakfast, etc.)

Please note that you can no longer claim for travelling to a regular workplace.

Travel and Subsistence (T&S):

As you are not working under SDC, each of your workplaces will be treated as a temporary workplace. Therefore, you may claim T&S expenses for all business-related mileage where you are obliged to travel to and from your temporary place(s) of work, provided that the travel is incurred wholly, exclusively and necessarily in the performance of your employment duties. You can make your claims and receive your tax relief in your payment through your umbrella company.

General Expenses:

As with those who are working under SDC, you will also be able to claim for the same general expenses directly from HMRC, provided that they are incurred wholly, exclusively and necessarily in the performance of your employment duties.

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.

• 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.
• Umbrella services allow you to make contributions to your personal pension plan via salary sacrifice. Saving you £100s each month in both PAYE and NI contributions.

• Working through an umbrella company is not as tax efficient as working through a limited company.
• Certain umbrella companies might advertise a 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.
• Certain 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.

With changes to IR35, you may no longer be able to contract directly through your Personal Service Company (PSC). However, using certain umbrella products will enable you to continue to operate your limited company and maintain your financial freedom. Your limited company will remain as it is today with no changes necessary.