To help temporary workers who are required to use an umbrella company for specific assignments (should they choose to accept the role), the government has released several pieces of guidance designed to make life easier for those impacted (including the supply chain). In this article, we’ve summarised the available government guidance. Links have been added for your reference. We hope you find this helpful.
Working through an umbrella company
Published in April 2021, Working through an umbrella company is online guidance written by the government for temporary workers.
The guidance covers all things related to umbrella company payroll, including:
- Who pays you
- How you get paid
- How much you should get paid
- Understanding your pay, including Holiday Pay, Key Information Documents (KID), umbrella company payslips, reconciliation statements, etc.
- Tax avoidance and the associated risks
- How to act if you believe you’ve engaged with a non-compliant umbrella company
- Reporting umbrella companies or other employers
Read the official government guidance: Working through an umbrella company.
Read our blog: Official Government Guidance: Working Through An Umbrella Company.
Check if you are at risk of tax avoidance
In November 2021, the government released a new piece of guidance for contractors and freelancers who may require the services of an umbrella company now or in the future. While very simplistic (the questionnaire only asks about 8 questions), the tool is designed to alert anyone who may have underpaid tax by engaging with a tax avoidance scheme – even if it was by mistake. It’s free to use, and we highly recommend you try it to ensure you’re paying the correct tax and are not subjected to any risk of a government investigation down the line.
Read the official government guidance: Check if you are at risk of tax avoidance.
Read our blog: New Government Guidance Sets Out To Help You Identify “If You Are At Risk Of Tax Avoidance”.
Check your payslip if you work through an umbrella company
November 2021 was busy for the government as more guidance was published than we’ve seen in previous months. In this piece of government guidance, a thorough overview of umbrella company payslips is made available – and it’s well worth a read. The guidance includes:
- Checking your tax and National Insurance
- Tips on what to look out for
- Payslip examples – These are really helpful and are well worth checking out now. If you have any concerns that your current umbrella is operating non-compliantly, compare your payslips to these examples. The Umbrellacompanies.org.uk team has also created helpful guidance for contractors and freelancers about umbrella company payslips. Please have a look.
- Risks of disguised remuneration schemes
- Understanding your responsibilities
- Reporting non-compliant umbrella companies and tax avoidance arrangements
- Additional information
Read the official government guidance: Check your payslip if you work through an umbrella company.
Read our blog: What You Need To Know When Checking Your Umbrella Company Payslips, According To Government Guidance.
Check how to reduce your risk of using an umbrella company who operates a tax avoidance scheme – Advice for recruitment agencies and businesses
Written in October 2021 and aimed at recruitment agencies and businesses that engage with temporary workers, this guide provides helpful advice for organisations to reduce risk when referring candidates to umbrella companies. There is a lot of information, and it’s very constructive.
- How businesses can get involved with tax avoidance schemes
- Types of tax avoidance arrangements (loans, grants, credit facilities, shares and bonuses, etc.)
- The risks of engaging with tax avoidance schemes
- The consequences of engaging with tax avoidance schemes
- Penalties for those who enable tax avoidance
- Liability for tax and National Insurance
- Reputational damage
- 7 steps to reduce the risk of engaging with tax avoidance schemes
- How to engage with temporary workers
- Potential clauses you can add to contracts with umbrella companies
- Payslips
- Educating workers
- Reporting tax avoidance schemes
Read the official government guidance: Check how to reduce your risk of using an umbrella company who operates a tax avoidance scheme.
Read our blog: HMRC Release New Guidance To Help Agencies Reduce Risk Of Engaging With Non-Compliant Umbrella Companies.
Top 10 umbrella companies
You must carry out your due diligence before using the services of an umbrella company. However, to make your life easier, we have created a list of our top 10 umbrella companies. They’re all accredited by either the Freelancer and Contractor Services Association (FCSA) or Professional Passport – the two most-respected professional bodies in the UK committed to ensuring the supply chain of temporary workers is compliant. Please have a look at them now – some have special offers at the moment!
