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Freelancers, Umbrella companies and the Inland Revenue

From a small number of companies in 2000, the number of umbrella companies offering their services to the growing Freelancers market is also rapidly growing. Up to 2007 Umbrella companies could offer to pay either by company dividends (paying the freelancer as a Director of his or her own company) or by PAYE. Since then the only option is to pay by PAYE. Umbrella Companies act as employer to Freelancers or other people working under contracts, and are entirely governed by the Inland Revenue. Thus one company cannot arrange for you to be paid more than another – the only difference in charges by different companies will be their own fees.  Freelancers should look at different umbrella company charges carefully – reputable companies will charge a flat fee regardless of how much the individual earns – there is not more administration if he or she earns £40 per day or £600 per day. Fees should average between £15 to £25 per week, though it is wise to check what is on offer for the fee. For example, it may be that some companies will charge a low weekly fee, but a high fee for professional indemnity and other essential insurance. [Read More...]