Do umbrella companies pay your tax? Yes. Most umbrella companies pay their tax through the PAYE regime. This means that you pay your tax and National Insurance Contributions (NICs) through the PAYE system – the same as someone who is employed on a full-time basis.
As with permanent employees, it’s easier to take home pay because you don’t have to deal with an admin team. Instead, you hire an employee to do the paperwork and the assistant will do the administration. You may also choose to have one of your assistants take care of invoicing and any other admin work.
As well as taking home the pay, you can also choose to give the umbrella company a bit more money in an effort to encourage more work being done by the umbrella company. This increases the value of your payroll deductions and increases your income when you’re not paying payroll.
Another way to maximise your take-home pay is to work through an umbrella company. This is a process in which one or both of your contractors works at home and receives full payment and benefits whilst providing essential services to you.
You may also opt to have one or both of your contractors work through an umbrella company and in doing so, receive payment from your client in the form of a salary or salary computed on the basis of a percentage of their total work. This provides a level of security and efficiency not available from permanent payroll solutions and is part of the attraction of umbrella companies.
When you work through an umbrella company, you’re essentially saying to the umbrella company: ‘You’re letting me work through you in a different way – without the stress that comes with permanent employment.
