How to change umbrella companies – a stress-free guide to switching providers

If you’re currently an umbrella company employee but are 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 this article, we explain how you do it. Keep reading for more information.

When should you consider changing umbrella companies?

If you’re not satisfied with the service being provided by your current umbrella, you should look to switch to another provider immediately. There are plenty of reasons you may decide to transfer umbrella companies, with the most common being:

• You are regularly paid late.
• The quality of services is gradually declining.
• The umbrella doesn’t respond to emails and fails to answer telephone calls.
• You suspect the umbrella is non-compliant and operating unethically (possibly a tax avoidance scheme).
• The umbrella company margin is higher than competitors or has recently been increased.
• The umbrella does not include any extras that you could benefit from, such as comprehensive insurance or access to an employee discount scheme.
• You have heard that the umbrella is under investigation by the government and has been assigned a Scheme Reference Number (SRN).
• Your recruitment agency has asked you to use an umbrella company on their Preferred Supplier List (PSL).

How do you change umbrella companies?

Changing umbrella companies is easy, and you shouldn’t hesitate if you’re unhappy with your current payroll provider. Below are the factors you will need to consider when moving from one umbrella company to another.

Identify a new umbrella company that you would like to join

When choosing a new umbrella, it’s a good idea to look at more than one.

There are a lot of boxes that your new umbrella company should tick, but most importantly; they should be fully compliant with HMRC’s rules and regulations (PAYE).

Engaging with a non-compliant umbrella company, even by mistake, could have serious consequences, such as a life-changing penalty from HMRC in future.

Request a take-home pay illustration and review umbrella company margins

When you’ve identified a handful of umbrella companies you’re interested in joining, ask each one for a tailored take-home pay calculation.

Reviewing each calculation is important because it is a great opportunity to check the umbrella operates compliantly and will pay you the correct amount.

Every compliant umbrella company should process your payroll in exactly the same way.

Therefore, if you notice that one umbrella is offering a significantly higher pay retention than another – alarm bells should be ringing.

You must also assess each umbrella company’s margin – the “fee” they will retain each time they process your payroll. Usually, weekly umbrella company margins will vary between £15 and £30, but choosing the cheapest isn’t always the best idea because they may not provide a compliant or reliable service.

Find out what the registration process consists of

Before registering with an umbrella company, enquire about the registration process. Compliant umbrella companies will require you to provide numerous pieces of personal information, send proof of identity (and right to work in UK, if applicable) and sign and return a contract of employment. We discuss these steps in more detail later.

Request a P45 from the umbrella company you are leaving

When you are sure you are leaving your current umbrella, contact them immediately and let them know about your decision. They will explain what you need to do, but it shouldn’t but much more than alerting them and requesting a P45 (a document you will need to pass over to your new umbrella company to ensure you’re put on the correct tax code).

Register with the new umbrella company

Once you have identified your new umbrella company, you will need to contact them to register for their service. Registering with an umbrella company can usually be done in two ways – over the phone or by completing an online registration form. The information you will need to provide your new umbrella company will include, but is not limited to:

• Full name
• Date of birth
• Address
• Nationality
• Contact information
• National Insurance Number
• Bank account information
• Assignment details

Provide proof of your identity and right to work in the UK (if necessary)

Before you can officially become an employee of an umbrella company, you will need to provide them with proof of your identity. Umbrella companies will accept copies of a live passport (British and Irish citizens) and a Settled Status 9-digit share code. Umbrella companies are no longer allowed to accept driving licenses as proof of identity.

Non-UK nationals will also need to provide proof of right to work (RTW) in the United Kingdom. The documents that umbrella companies can accept are:

• EU/ EEA Passport
• Settled Status 9 Digit Share Code (after the 6th April 2022 we can no longer accept a Biometric Residence Permit (BRP), Biometric Residence Card (BRC) or Frontier Worker Permit (FWP) as proof of right to work)

Read, sign and return the umbrella company’s employment contract, but only if you’re entirely happy with its content

The final step you will need to complete before officially becoming an employee of your new umbrella company is to read, sign and return the employment contract. This document will include all the information you need to know about your new employer, and you must read it thoroughly. Only sign and return the contract if you are entirely satisfied with its content, and if you have any questions, ask the umbrella immediately.

If you are leaving an umbrella because it’s non-compliant, report them immediately

If you suspect the umbrella company you’re leaving is non-compliant, you should report them to HMRC immediately. This will ensure they are investigated and temporary workers do not use them in the future. For more information, please visit the dedicated page on the government’s website: Report tax fraud or avoidance to HMRC.

To report an FCSA accredited umbrella company, you can ring the new dedicated FCSA whistleblowing hotline on 0203 302 5112.

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