5 ways to make sure you’re covered no matter the weather…
As anyone who’s been in the temporary worker market over the last few years will know, the constant barrage of legislation change has restricted the way contractors can work and has meant they seemingly have to jump through hoop after hoop to reduce the risk of a hefty tax bill. This has also meant an increase in the checks that Umbrella companies have to do.
The Umbrella market is huge, with hundreds of players all claiming to offer the same thing, so how do you choose the right one for you? If what you want is a compliant provider that will ensure you pay all the right things to the right people then read on…
Always speak to an Umbrella provider over the phone and ask lots of questions about how it all works
– A good Umbrella company will know the answers to your questions and won’t try to skirt around the difficult stuff just to get you on board. Also, if the number isn’t a UK number check they aren’t an illegal ‘offshore’ provider using tax breaks from other countries.
Look up how long the Umbrella company has been trading</h4 – An established and long standing company is more likely to have weathered many HMRC storms and understand what that means for you – you will be able to find most of their accounts on companies house for free to make sure they’re here for the long term…the last thing you want is to be changing providers every few minutes.
Expect to have deductions taken
– As annoying as paying tax can be, it’s a legal requirement for everyone, including contractors. You should expect to have deductions made for Income tax, Employee and Employers National Insurance, Holiday Pay, Employer Margin and to make Pension Contributions. These are all deductions a compliant Umbrella has to make on your behalf so ensure there’s nothing missing.
Expect to answer questions to determine whether you can claim any expenses
– Legislation that came out in April of this year restricted those who can claim normal expenses. HMRC expect 90% of contractors through Umbrella companies to not be able to claim these, so a compliant Umbrella should be asking you questions to find out where you sit. Sometimes your agency will have confirmed with the Umbrella Company that you can’t claim commuter expenses which means no questions need to be answered, so make sure you check.
Be wary of other models
– The 3 most common models for being paid as a contractor are; Umbrella (otherwise known as an Employment Business), Setting up your own Limited Company and the Construction Industry Scheme, for those working in construction. If a provider talks to you about anything else then it’s worth being a little cautious and ensuring you understand exactly how it works.