An Umbrella Company is a company that acts as an employer for contractors working on fixed-term contracts. They act as an intermediary between the contractor and their end client or agency. Its primal function is to organise payment for the contractor. To do this they collect the contractor’s earnings from the end client or agency and then pay it onto the contractor after deducting Taxes and National Insurance Contributions.
Umbrella clients are paid in a similar way to permanent employees (PAYE). As a result, the umbrella company will deduct Tax and Employee National Insurance Contributions from your pay. These will be sent to HMRC. As an umbrella employee, you’ll also be responsible for employment costs, including the Apprenticeship Levy and Employer’s National Insurance Contributions.
Additional deductions that you will see on your payslip will include Holiday Pay (which is simply a reallocation of your own pay), student loan repayments (if applicable) and pension contributions (if you choose to remain in our chosen pension plan).
All deductions made from your payslips will be:
- Employee National Insurance Contribution
- Employer’s National Insurance Contribution
- Holiday Pay (if accrued)
- Pension (if applicable)
- Umbrella Margins
- Student Loan (if applicable)
The umbrella margin is the amount an umbrella retains each week/month from the funds it receives from an agency or client. This is agreed in advance with the agency or client.
You should know the Umbrella margins before starting with the umbrella company, this should also be include in the Pay Illustration you receive from the umbrella company .
When an umbrella company contracts with and receives funds from an agency or client the funds are used:
- Firstly to cover its margin
- Secondly to cover employer taxes being Employer’s NI and Apprenticeship levy
- Thirdly to cover a contractor’s pay and holiday pay
There is no separate fee to the agency/client or the contractor. The margin received by the umbrella company is used to cover its own costs, including staffing, IT, processing fees, property overheads and bank charges, contractor insurances and also to pay for other costs such as SSP and SMP.
insurances and also to pay for other costs such as SSP and SMP.
For more information on the why a contractor pays Employers National Insurance then please visit our blog article: Do Contractors pay Employers National Insurance?
Yes, even if you are in a middle of a contract which is about to end you can join us by simply getting in touch with us through email firstname.lastname@example.org, contact us page or calling one of our advisers on 01582344044, we will be happy to discuss this with you in more detail.
Yes. We can payroll you through multiple Agencies. you simply have to provide us with agencies details and our team will get in touch with the agencies for you to streamline the contract and invoicing for you.
Despite providing the same day rate to different umbrella companies you may have received illustrations which give you different take home pay amounts. Don’t be fooled by higher take home pay projections as some providers may adjust the number of working weeks used in the calculation, include expenses or use a tax code that gives you a greater tax-free allowance, so you take home pay seems higher.
Please be aware that the only difference between compliant umbrella companies is the weekly or monthly margin.
Working through Ovations Umbrella
There is no joining or exit fee with Ovations Umbrella. Joining us is a matter of minutes. You sign up through our online joining portal or by talking with one of our advisers on 01582344044 who will go through what you need to do next to join us.
If you found work through an agency, they would normally deal with your pay themselves. However these days, agencies prefer not to do this as it saves them time and money and means they can concentrate on matching workers with available work. As such, they usually suggest that people use an Umbrella Company.
This way the Umbrella company becomes your employer, they then receive your Pay from the agency deduct all Taxes and National Insurance Contribution (NIC), Umbrella margins and then pay you the Net amount due to you.
You will receive an email when your payroll is run through which you can logon to your Ovations Umbrella online portal and view or download your Payslips, P45 or P60 forms at any time of the day.
Our payment terms reflect those agreed with your Agency. We will pay you depending on the agency payment terms which can be weekly or monthly.
You will be paid into your nominated bank account based on the payment timing and frequency agreed with your agency.
You are employed by Ovations Umbrella. You do not have any direct contractual agreement with your agency.
No, as our employee you pay employed levels of tax and national insurance so IR35 is not applicable. Contractors who operate through their own limited company and withdraw funds as a dividend need to consider their IR35 status. For more information on this service please contact us.
When you sign up with an umbrella company you become their employee and thus sign an Employment Contract and get entitled to all the standard rights of an employee. We also take care of your insurance and pay all the necessary tax and NI contributions to HMRC on your behalf.
Statutory and other benefits
Yes. You need to contact our team to let us know if you are sick and unable to attend work. You can self certify for the first 7 days, thereafter we need to see a doctor’s certificate. Once we receive all the required information we can then check against the SSP qualifying conditions and whether you qualify for SSP. If you qualify for SSP then we will make the necessary payments as per your payroll schedule.
Yes, this may be advanced or accrued. Bank holidays are included in the annual holiday allowance. You can decide to accrue or advance Holiday Pay at anytime in the duration of your contract.
Umbrella companies don’t manage their own pension schemes but do auto-enrol its employees into a workplace pension run by an authorised pension provider. However, there is an opt-out option available to it.
Ovations Umbrella is able to provide a tax efficient salary sacrifice arrangement which enables contributions to be made to a pension provider of the worker’s choice.
To claim Statutory Maternity Pay (SMP) we need your completed MAT B1 Maternity Certificate and a letter notifying us of your personal dates. For Statutory Paternity Pay (SPP) we need an SC3 form and for Adoption pay an SC6 form. Please contact our team for these forms.
Yes, as an employee of Ovations Umbrella, you are automatically covered by our insurance. These include:
- Employers Liability – up to £10,000,000
- Public/Products Liability – up to £1,000,000
- Professional Indemnity – up to £2,000,000
We don’t want your questions going unanswered! If you can’t find a solution to your query above, please send us a message using the Contact Us form below or give our team a call on +44 7879 997547