If you work via an umbrella, you may incur various expenses while carrying out your work. Here, we look at how expenses are treated for tax purposes.
Umbrella Companies
Virtually all IT contractors work via limited or umbrella companies. In this section, we explore how PAYE umbrella schemes work.
- Find out what a PAYE umbrella company does.
- Why you should be cautious when reading umbrella company reviews.
- How much do the leading umbrella companies charge?
- The pros and cons of using an umbrella company.
- Why the scope for claiming umbrella company expenses has narrowed due to the SDC rules.
- What does this mean? Our umbrella company glossary.
- Which structure is best for you? Limited or Umbrella?
- Umbrella company comparison - 15 top tips
- Calculate your net take home pay here.
5 essential tips to help you find the best umbrella
- Don't focus purely on the weekly cost. Good customer service and communication skills are just as important. Ask other contractors for recommendations if you're looking for a new provider.
- Only sign-up to a UK-based PAYE umbrella. Never use offshore payment tax avoidance schemes.
- The only difference between take home pay quotes between umbrella companies should be the margin (fee) they charge.
- If you're caught by the Off-Payroll (IR35) rules, consider a flexible umbrella/limited model of working, so you can switch between the two with ease. Most leading accountants/umbrellas offer this service.
- Find a trusted umbrella in our umbrella directory.
The Top 10 umbrella company questions – asked by employees
Frequently asked questions by umbrella employees, based on our experience working with umbrella providers and contractors over the past decade.
Umbrella companies and holiday pay – how is it calculated?
You are entitled to receive holiday pay as an umbrella company contractor. Here we look at what holiday pay is, and how it is calculated.
How to change umbrella companies – a stress-free guide to switching providers
If you’re an umbrella company employee unhappy with the service you are receiving, how do you change providers? Initially, it may sound rather daunting. However, changing umbrella companies is a straightforward process in reality.
What tax do you pay if you’re an umbrella company employee?
When you work through an umbrella company in the UK, you are an employee for tax purposes. This means you must pay income tax and NI on your earnings.
Umbrella companies – ‘gross contract rate’, ‘umbrella rate’, ‘assignment rate’ – what’s the difference?
If you are quoted an umbrella or assignment rate, then this is deemed to meet all employment costs before the taxable salary is arrived at.
Agency Workers Regulations (AWR) – guide for umbrella employees
Although the AWR legislation is complex, the premise is simple: to protect temporary workers employed via staffing agencies. Read our contractor summary.
The Key Information Document explained for contractors and agency workers
Agencies must provide contractors with a Key Information Document. Learn what a KID covers, how it works in 2025, and what to check before signing.
Can my agent force me to use a particular umbrella company?
If you contract through a recruitment agency and want to use an umbrella, can the agent insist you use a provider on their preferred supplier list (PSL)?
What to do if your umbrella company goes bust
When an umbrella company goes bust or enters liquidation, hundreds of contractors can be left without pay. This scenario can cause great concern.