If you are reading this, you might have just secured a new contract and want to make sure you are choosing an Umbrella Company you can trust.
Registering with an Umbrella Company couldn’t be easier. With nearly all of them, you will be able to sign up within minutes and start contracting. There are several steps we strongly advise you follow to ensure you are safe; this is what we are going to explore in this post.
Let’s begin! 🙂
STEP #1 - Choose an Accredited Umbrella Company
There are two things you should fully understand when it comes to choosing an Umbrella company:
- You will be solely responsible for the taxes the Umbrella Company is paying on your behalf.
- 100% of non-compliant Umbrella Companies say they are.
After understanding these two facts, it is only natural to want to work with an Umbrella Company who have secured an accreditation after following a thorough audit process.
All the Umbrella Companies on FindYourUmbrella are accredited. You can compare over 50 of them in our Comparator. If you would like to go through another route, just make sure to register with an Umbrella Company accredited by FCSA or Professional Passport. It will be extra insurance in terms of avoiding a life-changing tax bill.
STEP #2 - Read the Terms and Conditions thoroughly
This might seem like rather obvious advice but trust us; it is not: Once you have selected an Accredited Umbrella Company, make sure you read through the terms and conditions.
Many of us aren’t inclined to carefully read terms and conditions; especially when something we want is in front of us. But the terms and conditions are the foundation of your contractual arrangement with the Umbrella Company.
It is essential and fundamental for you to thoroughly read and understand fully what you agree to.
STEP #3 - Update your recruitment Agency or End Client
Once you are registered with your Umbrella, make sure you let your recruitment agency or end client know. Afterall the umbrella company you have chosen is where they will be sending your salary to.
Most of the time the Umbrella Company will contact them directly, however, a quick email to the Recruitment Agency or End Client copying in the Umbrella Company is always an effective way to make sure all parties are in contact to process your pay without any delay.
STEP #4 - Provide all needed documents
The umbrella company will require key information from you to process your pay such as proof of ID, national insurance number and a copy of your bank statement.
It is also essential to provide your Umbrella Company with your P45. In case you don’t know, a P45 is a document showing how much tax you’ve paid on your salary so far in the tax year (From the 6th of April until the 5th of April the following year). You will get a P45 from your previous employer. (Source: UK Government website)
If you don’t have a P45 when signing with an Umbrella Company, no worries, you can complete an HMRC’s starter checklist form. Access the online starter checklist on .gov.uk.
Make sure you give your P45 or complete the HMRC’s Starter checklist if you don’t have one. If not, you may be put on an emergency tax code which will reduce your take-home pay.
Emergency tax codes are applied to your salary automatically by HMRC if they don’t have enough details about how much tax you need to pay. Depending on the information available, under an emergency tax code, you will be charged 20% or 40% of tax on your full pay.
Don’t worry; an emergency tax code is a temporary measure. As soon as HMRC have the right information about your earnings, your tax code will be adjusted, and a refund should be added to your wages and paid automatically through the Umbrella.
STEP #5 - Start Contracting
Once you have completed all these steps, you are done!
The only thing you will have to do is submit your timesheets and expenses!
Conclusion
Registering with an Umbrella Company is a pretty easy and straight forward process. Make sure you stay safe and don’t let yourself fall for companies promising an unrealistic take-home pay!
In guidance directed to contractor and agency workers, HMRC is clear:
“if it is too good to be true, then it almost certainly is.”
— Source: HMRC