Confused about which Umbrella Company to go with? Let
Nasa help!
With over 350,000 UK agency workers now benefiting from the
outstanding tax advantages of using umbrella companies, the choice
of which umbrella company to use is made on a daily basis by many.
This should be simple as long as you follow a few basic
guidelines.
So, what makes a good umbrella company?
1. The service fee should be low
The lower the service fee, the more of your income you
keep. You will get tax deductions for your fee and you can
usually more than offset the fee with tax relief on valid employee
expenses.
2. The service should be
excellent
Your umbrella company should pay you on the same
day it receives money from the agency. It should
arrange your contracts quickly, provide you with
service information and respond promptly to
queries you have.
3. Expenses must be HMRC
compliant
Temps and contractors are allowed the re-imbursement of
expenses if they are working at temporary offices. The rules apply
across the board for all workers and all umbrella companies. You
cannot claim expenses for costs you have not incurred and if you do
its tax evasion. Your umbrella company must be
compliant in how you record your costs and submit your
receipts in order to save you serious investigation problems with
HMRC.
4. The
Umbrella Company
Your umbrella company should pay you statutory sick pay,
make the required pension provisions, maternity/paternity pay and
have its accounts up to date. A good umbrella company will do all
of these things giving you full peace of mind, enabling you to put
your trust in them to receive your income and pay all the correct
taxes at the right time.
The Pitfalls
Word of mouth is usually the most common way of hearing about
the 'bad' umbrella companies or the ones that aren't perhaps
working in a compliant way. A chat to fellow contractors or
temporary workers is one of the best ways to find the best umbrella
company for you and its always reassuring to hear it from someone
who's experienced it firsthand. But as usual and in every
element of life there are some unscrupulous operators and we have
identified the main trick they try to play - so watch out, you have
been warned...
"You can claim a lump sum for expenses without having
incurred the cost"
This statement is incorrect. You can only
reclaim an expense if you have actually spent it. The lump sum is
the maximum you can reclaim in incurred expenses and you always
have to keep a receipt yourself. If you claim more than you have
spent or don't keep receipts you are joining the fiddle and believe
us, it isn't worth it!
If you are a client or potential client of ours here at Nasa, we
can discuss any of these points with you over the phone and offer
some advice should you need it. We hope your contract or temporary
work is lucrative and by adding the tax relief of working through a
good, honest and compliant umbrella company you can be assured of
excellent tax efficiency and peace of mind.