We are not here to antagonise anyone, especially umbrella companies that are committed to operating compliantly. However, we recently came across an article that grabbed our attention – for the wrong reasons. The article in question suggests that a margin up to £30 per week for an umbrella company is competitive. We’re going to throw it out there – no it’s not! You can find much more competitive offers from some of the UK’s leading providers. Trust us – we know a thing or two about umbrellas.
Firstly, lets remember that umbrellas do more than just pay you. They become your employer which means you get access to Employee Benefits, including Statutory Sick Pay. Therefore, the umbrella company margin isn’t just an amount that is taken in exchange for paying you your salary. You get more than just payroll included in the umbrella company margin.
Umbrella companies tend to offer some extras as part of their service – to entice you to use them rather than a competitor. However, unless an umbrella company is offering you the chance to use their private jet as often as you like – a £30 per week margin is far too high! If you come across an umbrella company margin of £30 or more – run like the wind!
So, what is a fair umbrella company margin? This is an excellent question, and one we would like to share our thoughts on. Like all businesses, umbrella companies have their overheads. They need to pay for their premises, equipment, staff, etc. Therefore, they must cover their costs, and generate enough income to make their offerings worthwhile. Judging by some of the wonderful umbrellas that feature on our site (including the top 10 umbrella companies), it appears you can get an industry-leading service for as little as £10 per week. Now this is excellent value, and you’ll struggle to find many companies offering such a competitive margin. However, it’s a good way of figuring out how low umbrellas go.
Maybe a £10 per week margin isn’t sustainable for an umbrella company. However, it’s still £20 a week less than the £30 per week margin that was described as “competitive” in the article we have a problem with. Therefore, we’re going to suggest that a fair, realistic and competitive umbrella company margin is anything between £10 and £20 per week, not £20 and £30 per week.
Find a margin from a compliant umbrella company that is between £10 and £20 per week and we’d suggest you’ve done well and you’ll get value for money. Anything over £20 – you’re probably overpaying.
One last thing – always makes sure that the umbrella company you use is accredited by the FCSA. It is well worth paying slightly more for an umbrella company margin if the provider is accredited by the FCSA, because it’ll mean you’re in the very safest hands and you’ll be paying the correct, legal amount of tax and National Insurance Contributions. Please take our word for it – it’s worth paying £1 or £2 more per week in order to be compliant with HMRC. After all, if you were ever subjected to a tax investigation down the line, it could come at a severe cost.
