A Contractor’s Guide to Choosing an Umbrella Company

A Contractor's Guide to Choosing an Umbrella Company

A Contractor’s Guide to Choosing an Umbrella Company

There are so many umbrella companies on the market that when it comes to choosing the right one, it can be a minefield. A cursory Google search suggests there are over 500 umbrella companies in the UK. It’s no wonder that deciding which to work with can leave you feeling more than a little confused. 

What should you, as a contractor, temp or interim worker, be looking out for when it comes to choosing an umbrella provider? And are there any red flags you should be aware of? 

If you are working through a recruitment agency, then the umbrella company may already be selected for you. The agency is likely to work with a preferred supplier, and your invoices, payments, taxes, contributions etc will already be taken care of. However, if the onus falls on you to choose your umbrella company, how can you decide which is the best one to go for?


Here are 8 tips to help you find your chosen umbrella:


  • Do your homework and background checks – the first step is to know that you’re going to have to do some homework and checks. The responsibility for finding a compliant umbrella is on you. If your tax and contributions aren’t handled correctly, you could find yourself liable. Be prepared to invest some time in finding the right supplier for you. 


  • Ask for referrals – your network is a great place to start when it comes to asking for recommendations on which umbrella company looks after their contractors. Ask your contacts who they use, whether they would recommend the service and what it’s like working with their supplier. It’s also worth noting they might offer a referral scheme that could benefit both parties. 


  • Look at accreditations – is accreditation important to you? Ideally, you should be looking for an umbrella company that has been checked and approved by an independent body. The Freelancer and Contractor Services Association (FCSA) is a good place to start. They are the leading body dedicated to raising standards and compliance in the temporary labour workspace. You could also look for umbrella companies that have been approved by Professional Passport. Look out for either logo and check on the accreditor’s website to make sure the listing is still current. 


  • Consider costs and fees – every umbrella company will have costs or fees you need to pay. These are likely to be deducted at the point of payment, so you don’t physically make a payment. You are essentially paying a fee for convenience and compliance. Your umbrella company should make the process of getting paid seamless and straightforward. Take time to understand what their fee structure is and how it applies to you. 


  • Beware of any too good to be true offers – linking to the above, any too good to be true deals should be a red flag. Your take-home pay should never be 100% of what you expect. As mentioned, your taxes, contributions and fees will come out of your gross pay. Watch out for any enticing deals that seem too appealing, as you don’t want to get caught up in tax avoidance or a messy scheme that could involve hefty penalties further down the line. 


  • Understand their processes, payment dates and how to claim expenses – once you have started to shortlist your umbrella company and you have a few preferred suppliers in mind, take time to understand their processes. It’s useful to know what their payment terms and dates are so you know exactly when your funds will land in your bank. Make sure you understand their processes for claiming payments and expenses. Again, you’re looking for a straightforward service that pays you promptly and compliantly. 


  • Are there any tie-in clauses or penalties? – one point that is often overlooked but worth considering is looking at tie-in clauses. Much like signing up for a phone contract or broadband deal, sometimes your needs will change. You might change your role or even move away from contracting to become a permanent PAYE employee. Check out what the tie-in clauses are, if any, from your umbrella company.  


  • What additional benefits or rewards do they offer? As temporary staff, interim workers and contractors become more popular, you might find there is more demand for both your skills and your custom as an umbrella worker. As such, it’s worth looking at the rewards available through your umbrella company. Increasingly we’ve had temps approaching us at Remus Rewards to ask about fuel cards and discounts on high street stores to help contribute to the cost of living. Rewards available through umbrella companies can range from online health and wellbeing services to discounted gym membership and even financial planning advice.  


Having additional offerings from your umbrella company like these rewards has been invaluable to many temps and contractors, particularly as their work was so unpredictable over the past couple of years.  

Overall, when it comes to finding an umbrella company, do your homework, ask your network and make sure you are ultimately making a compliant choice that works for you. 

Remus Rewards

Remus Rewards, a division of People Value Limited, is an REC, FCSA and APSCo Business Partner, a TEAM Service Provider and a market leading provider of reward and loyalty solutions. We specialise in providing solutions to the contractor and temporary labour market across the UK. By using our cloud based reward technology, businesses can improve their proposition, performance and increase engagement, morale and loyalty. Take advantage of savings on high street shopping, including 7 major supermarkets, eating out, special rate cinema tickets, discounted gym memberships and our Fuel Card which offers discounted fuel at over 35% of the UK motorway service stations.