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  • Writer's pictureUmbrella Search

Top tips for securing the best value umbrella company

Updated: Nov 13, 2023

If you're shopping around for the best umbrella company for your contracting needs then we understand that you want to get a fair deal.

The great news is that umbrella company fees remain competitive, so you shouldn't have to pay sky-high fees in exchange for a great service.

To help contractors find the best value umbrella company, in this guide Umbrella Search outlines the key factors contractors should look out for to secure a fair deal from their chosen provider.

What fees does the umbrella company charge?

The best place to start when finding the best value umbrella company is to look at fees.

Every umbrella company charges fees in exchange for the range of services they provide to the contractor.

These services include:

  • Putting the contractor onto their umbrella company payroll

  • Invoicing the client on the contractor's behalf

  • Processing the contractor's salary, deducting tax and National Insurance, pensions contributions and student loan if applicable, providing the contractor with a breakdown of their take home pay via a payslip

  • Providing the contractor with statutory benefits such as holiday pay, sick pay and paternity or maternity leave

  • Employing the contractor and in turn giving them continuity of employment and ensuring exemption from IR35

  • Covering the contractor with compulsory insurance

  • Offering a range of benefits such as life insurance, same day payments, ability to buy extra holiday pay etc.

An umbrella company takes the stress and hassle out of running your own limited business, taking care of all the admin and paperwork involved, giving contractors more time to work on the project at hand.

It's no surprise that working through an umbrella company is an increasingly popular route.

But how much do umbrella companies charge in exchange?

Contractors will be relieved to know that in a world where it seems that everything has gone up, umbrella company fees remain competitive with most umbrella companies charging in the region of £25+ per week.

Fixed vs percentage fees

Another thing to look out for when finding a good value umbrella company is how they charge their fee.

If you find an umbrella company that charges a fixed fee of £25 per week this is great news as you know what you'll be paying each month. This fee won't change, so you can plan ahead and budget accordingly.

However, some umbrella companies will charge fees by a percentage of the contractor's pay. Here, the fee is worked out as a percentage of whatever the contractor earns each month. This is typically the worst option for contractors who can end up paying higher fees and will pay more if they begin to earn more, despite receiving the same level of services in return.

What is an umbrella company?

Net vs gross fees

Another thing that contractors should look out for to ensure they are getting the best value is whether the umbrella company is charging their fees as gross or net fees. Again, this will make a difference in terms of how much you end up paying, so it's important to factor into your search.

When an umbrella company charges a gross fee, the contractor will pay the fee before tax relief has been applied. This is due to the fact that umbrella company fees are classified as legitimate business expenses by HMRC. This option is generally considered as beneficial to the contractor as it reduces their tax bill meaning you will make savings.

When an umbrella company charges a net fee however, the fee will be charged after tax, meaning the contractor will pay slightly more in tax than they need.

Other things to look out for

As well as looking at the umbrella company fees, how much these are and how they are charged, contractors should also look at any other costs the umbrella company may charge. After all, some umbrella companies will charge extra for certain things, meaning it's always important to read the small print.

Some umbrella companies will charge contractors sign-up fees or exit fees. It's important to check whether this is applicable and how much the umbrella company will charge. As not all companies will charge these you don't want to be out of pocket for merely singing up to your chosen provider.

Likewise, some umbrella companies will charge extra for carrying out additional admin tasks or for providing certain benefits such as same or next day payments. If you think this will apply to you then you should check out how much this will set you back, or whether you can find a company that doesn’t charge you for such extras, as this will have an impact on your take-home pay.

Let Umbrella Search help you find the best value umbrella company

Finding the best value umbrella company will take time and energy, requiring research and due diligence. Thankfully Umbrella Search are here to take on the task for you.

At Umbrella Search we work with you to learn what’s important to you as a contractor, so if finding the best value umbrella company is a top priority we will factor this into our search. Our team of experts will put in the time and take the stress from you, to find a great value umbrella company that offers everything you want.

Whether you’re new to contracting or are just considering moving to and umbrella company, whatever industry you work in, we’re here to find the best solution for you.

To see how our team can help you and to take the first step towards finding an umbrella company you’ll love to work with, just get in touch with the Umbrella Search team today.

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