Contractors who struggle with understanding the technical aspects of the job such as admin, taxes, and invoicing may benefit from an umbrella company. An umbrella company is essentially a company that employs contractors who work on fixed-term contracts and are responsible for the administrative duties associated with contracting.
When employed by an umbrella company, contractors are eligible for certain benefits they may not have had access to previously, as the umbrella is an official employer and must be compliant with legal responsibilities. They are responsible for issuing your pay which means they also handle the deductions in accordance with the HMRC rules, but they also must follow the protection responsibilities. Maternity pay, paternity pay, statutory sick pay, holiday pay, and access to work are all benefits that are provided that are not accessible for an individual when working as a non-limited company. Although working for umbrella results in taxes being immediately deducted from pay, it can allow for higher chances of being able to borrow from a lending perspective, as they are seen as a continuous employer when you switch roles while working with them.
Individual benefits from these companies such as discounts and money off strategies can also be a rewarding element of going with an umbrella company. For example, at Mangata Global we offer a refer a friend scheme that allows you to have 1 month free of fees when successfully referring a fellow contractor to us.
Working with an umbrella company as a contractor is beneficial for those who require aid with administrative aspects such as invoices, taxes, and chasing payments. Not only that but you are also protected by employees’ rights and have access to elements such as holidays and sick pay which you would not have direct access to previously. Umbrella companies allow for the freedom of contracting and being self-employed while still having access to the protection that normal employers provide.
Check out our blog ‘Self Employed Services’ to see what we offer for our contractors only at Mangata.