Should You Switch Umbrella Companies? A Step-by-Step Guide
Working through an umbrella company is often the simplest way to contract inside IR35 — but not all umbrella companies are created equal. Contractors frequently ask: “Can I switch umbrella companies?” The answer is yes — and in some cases, you may benefit significantly from making the change.
Whether you’re unhappy with service, concerned about compliance, or just seeking better take-home pay transparency, switching umbrella companies in 2025 is straightforward if you follow the right steps. This guide explains why you might consider switching, what to check before moving, and the exact process to do it safely.
Reasons Contractors Switch Umbrella Companies
Not all umbrellas operate to the same standards. Here are the most common reasons contractors switch:
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Poor customer service – delayed payroll, unresponsive support, or errors on payslips.
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Compliance concerns – some umbrellas run aggressive expense schemes or disguised remuneration models that put contractors at HMRC risk.
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Hidden fees – deductions not clearly explained, or higher-than-expected margins. We explain more about hidden fees in our article here.
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Limited employee benefits – some umbrellas offer only the legal minimum, while others provide extras like insurance, faster payments, or rewards.
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Agency mandates – occasionally, agencies only work with certain umbrellas, requiring a switch.
If you’re experiencing any of the above, it’s worth reviewing whether your umbrella is the right fit.
Key Checks Before Switching
Before making a move, contractors should conduct due diligence. Ask yourself:
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Is the umbrella FCSA accredited or APSCo compliant? Accreditation indicates higher compliance standards.
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Are their payslips transparent? A compliant umbrella should clearly separate gross pay, deductions, employer costs, and net pay.
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Do they promise unusually high take-home pay? If so, this is a red flag for tax avoidance schemes.
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How responsive is customer service? Test by asking questions before you sign up.
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Are benefits and costs competitive? Compare holiday pay, pensions, and weekly margins.
- Check out our list of FCSA Accredited Top 10 Umbrella Companies.
Step-by-Step Guide to Switching Umbrella Companies
Step 1: Notify Your Current Umbrella
Give formal notice to end your employment with your existing umbrella. Most umbrellas require a short notice period — often one week.
Step 2: Request Your P45 and Final Payslip
Your current umbrella must issue a P45 and final payslip showing your year-to-date tax and NI contributions. You’ll need this for your new employer (umbrella).
Step 3: Choose a New Umbrella Carefully
Research options using a our list of FCSA accredited Top 10 Umbrella Companies or recommendations from fellow contractors. Look for compliance, service quality, and transparent margins.
Step 4: Register with the New Umbrella
Complete onboarding forms, provide ID and right-to-work documents, and sign a new employment contract.
Step 5: Provide Your P45
Submit your P45 to your new umbrella so they can apply your correct tax code. Without this, you risk being placed on emergency tax.
Step 6: Inform Your Agency or Client
Give your agency the new umbrella’s details so they can redirect payments. This avoids payroll delays.
Step 7: Review Your First Payslip
Double-check that your pay, deductions, and tax codes are correct. Resolve any issues early to avoid repeated mistakes.
When Is the Best Time to Switch?
You can switch umbrella companies at any time, but some periods are smoother than others:
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Between contracts – switching is easiest when starting a new role.
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End of tax year – some contractors prefer switching in April to align with HMRC reporting.
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After payroll cut-offs – avoid switching mid-cycle, as this can delay payment.
Common Mistakes to Avoid
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Not collecting your P45 – without it, you risk emergency tax deductions.
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Failing to review payslips – errors can snowball if unnoticed.
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Rushing into the first umbrella offered by your agency – agencies may have preferred providers, but you should still check compliance independently.
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Ignoring compliance red flags – if an umbrella sounds “too good to be true,” it probably is.
Benefits of Switching to a Better Umbrella
Switching can provide immediate advantages:
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Improved take-home pay transparency – clear breakdowns of pay and deductions.
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Faster, more reliable payroll – no more late or missed payments.
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Peace of mind – confidence that your umbrella is 100% HMRC-compliant.
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Better perks – some umbrellas provide added-value benefits like healthcare, insurance, or loyalty rewards.
Final Thoughts
Switching umbrella companies in 2025 is completely possible and often beneficial. The key is to do it properly: check compliance credentials, collect your paperwork, and communicate with your agency.
A good umbrella should make your contracting life easier, not harder. If your current provider isn’t meeting expectations, don’t hesitate to switch — but always choose compliance and transparency first.
