Self Employed model or working under an umbrella brand - is your percentage cut reasonable or excessive?

When you choose to be self employed working under wither a model or umbrella brand you are giving up a significant chunk of your income to an umbrella company—often between 10% and 50% but the question isn’t just about the percentage but about the true value you’re getting in return and what happens to "your" business should you choose to leave.

Is the umbrella brand helping you grow your business or growing their own brand?

Is the umbrella brand simplifying your admin, or simply costing you more than it’s worth?

Is the business that you are creating even really your business?

All important questions that you should look at before entering into a contract and starting work.

Here’s a balanced look at the major considerations to help you weigh the costs versus the gains:

Brand Value: Is the brand really generating you business?

• Lead Generation: Does the brand bring in clients you wouldn’t reach on your own, or are you generating most leads yourself? If the business isn’t coming unilaterally from their reputation, you may be overpaying.
• Client Appeal: Is the brand itself a selling point? A reputable brand could justify the percentage if it directly contributes to higher fees.

Tools and Tech: Are they a better price than you can source?

• Included Tools: Some umbrella companies offer tools like systems, systems support, technology, for Estate Agencies it could be portal access, for recruiters job board access etc. However, these often have affordable alternatives. Estimate the cost of similar tools if you went solo and weigh that against what you’re sacrificing.

Training and Resources:

• Evaluate the relevance of their training resources—are they truly advancing your career, or would you benefit just as much from free or lower-cost options?

Administrative ease vs. your percentage cost

• Cost Comparison: Umbrella companies should handle tax, payroll, and compliance, especially important under IR35. But are their fees lower than what you’d pay for a small accounting service or tax software?
• IR35 Support: If you fall within IR35, an umbrella company might save you time and stress. But if you’re outside IR35, managing these elements yourself may be simpler and cheaperWeighing the Percentage Cut

Assessing Fair Value:

High-percentage cuts should deliver high-value returns. Are you genuinely gaining equivalent or greater value from the company’s support, resources, and brand advantage? If not, it might be time to re-evaluate whether this arrangement aligns with your goals and budget.

Business Ownership

• Do you own the business you are building? If you were to leave - do your clients you have won belong to you? Are you allowed to move to another umbrella without restrictive covenants for example? Can you leave the umbrella and rebrand as your own business? Always check before you sign your agreement.

Bottom Line

To make an informed decision, create a simple ledger of what the umbrella brand provides versus what you could manage independently. Each cost item should have a real pound value next to it. If what you’re giving away outweighs the unique benefits, you may find that managing things yourself or finding alternative support could boost your profitability. In a country where its becoming increasingly popular to take the self employed brokerage option, weigh up the cost of what you are giving away.

If you are thinking of leaving your salaried role to explore working with a brokerage or umbrella company and would like to discuss this in more detail, ProFind Founder, Sally Asling is happy to discuss. Having experience in the UK of brokerage models and company ownership she is able to add valuable insights.

Sally Asling - Founding Director ProFind Property Recruitment

[email protected]