Whats the point in using umbrella companies?

“What’s the point in using umbrella companies” is a phrase I’m hearing more and more recently, I think that it’s safe to say that after the new legislation was passed in April (T&S) the biggest thing to come to light for me is how miss sold the Umbrella industry has been over previous years, in many instances umbrella has been sold to the highest bidder rather than what’s best for the contractor.

 Whilst it is true that many contractors working through umbrella companies will find it very difficult indeed to claim tax relief on their travel and subsistence expense, so with this in mind, what will the benefits to workers be, if they will be unable to claim tax relief on their travel and subsistence claims from April 2016?

Well the answer is many, the eye catching benefit to contractors is tax relief but it’s not the only benefit.

• Full employment rights - Include all statutory benefits, i.e. holiday pay, maternity and sick pay etc...
• Holiday pay upfront – Last year across the UK 27% of contractors didn’t claim holiday pay, this way getting it upfront means you’re never going to lose money because you forgot to claim.
• Invoicing – The umbrella company processes timesheets and invoices the agency on the workers’ behalf. They will also do the chasing of payments if required.
• Pensions – Umbrella companies provide access to group pension schemes.
• Continuous employment– As a contractor it is not always easy to access financial services such as mortgages. Umbrella companies can provide a solid employment history for mortgage lenders and many partner with contractor specialist financial advisers.
• Company reward schemes – Giving contractors access to thousands of online and in store cash back & discounts, for example 5% cash back at supermarkets like Sainsbury’s, Asda and 10% cash back at high street restaurants like Pizza Express.

What about to the agency I hear you ask?

• Protection – Umbrella companies provide agencies with the assurance that their workers’ tax affairs are in order meaning that there are no potential liabilities to be passed up the supply chain.
• Employment rights – Employing a large workforce comes with a lot of responsibilities which are handled by the umbrella company. There would be considerable additional costs to an agency if they were to employ their contractors.
• HR – Running a large workforce also comes with problems around disciplinary and grievance issues. Again the umbrella company will deal with all day-to-day issues around HR management.
• Added value – Happy contractors are loyal contractors so working with a partner that can add value to the relationship between worker and agency is vital in a competitive market. An umbrella company can offer extra benefits to workers such as childcare voucher schemes, loyalty discounts and cash back shopping schemes.

So why can you still trust Parasol?

We offer a transparent solution for the contractor - not any alternative complex ‘scheme’ that may be promoted post April 6th

We are the market’s compliance leader, founding members of the FCSA and part of APSCO

We are uniquely placed in the market to deliver high volume year end tax returns for contractors through our sister company Brian Alfred

Our compliant best advice process remains - we won’t force people into PSC if it’s not right for their needs. Umbrella is a still a viable employment option for contractors

Trust us as we’ve kept abreast of many legislation changes in the 15 years we’ve been in business.

If you are unsure about the legislation and or would like to hear about how Parasol can help you, your business and your contractors please contact me on [email protected] or call me on 07557 362022