There are several disadvantages of using umbrella companies for your payroll (compared to other options such as operating through a personal service company). A lot depends on your circumstances, but some of the widely agreed disadvantages of using an umbrella company are: not very tax efficient (PAYE), lack of control over finances, statutory employee benefits are not great compared to some of the benefits permanent members of staff may receive from their employer, the supply chain may result in delays to your payments - and it's out of your hands, there are plenty of unethical umbrellas out there targeting contractors and freelancers, and choosing a compliant umbrella isn't as easy as it should be, and it's unlikely you can claim tax relief on expenses.

Throughout this website, you will see many sentences along the lines of – “it’s important you conduct thorough due diligence before selecting an umbrella company for your payroll”. But what does this mean? Simply put, you’re responsible for your payroll (regarding choosing an umbrella). Therefore, you must conduct in-depth research into your chosen provider to ensure they’re compliant and provide dependable service. Even by mistake, engaging with a tax avoidance scheme could land you in serious trouble with HMRC.