Umbrella Company Facts
All umbrella companies are not equal. Check the small print and ask questions.
To provide you with a proper payment, provision and protection service, an umbrella company must provide you with the following:
- A Holiday Pay mechanism
If this is not part of the service, the umbrella company is operating in contravention of Employment Law. Your financial safety, your employment status and IR35 is at risk. This begs the question: “What else is the company not doing that they should be?” - Receipted Expenses
Most claims about unreceipted expenses are, pardon the pun, just claims. Some companies allow you to claim unreceipted expenses, but they do not have a dispensation from HMRC allowing these unreceipted expenses. This puts you at risk. If tax and National Insurance is not being paid as a result of claiming expenses, you need to provide auditable evidence of those expenses i.e. receipts. If you do not have receipts you are putting yourself at risk, and a large tax bill may be coming your way. - Per Diem expenses
Some companies allow per diem expenses i.e claiming a fixed amount per day e.g. £5 for lunch. This is not general HMRC policy. Remember you can only claim what you actually spend. You can only offset what you actually spen against tax and NI. Some companies do not have a HMRC dispensation, but they have an insurance policy in place should you be investigated. Do you really want the hassle of being investigated? Get it right first time! - Employment Contract
You must have a proper employment contract in place. If you are a shareholder, a director or both you are potentially at risk of IR35 and employment status. Seek advice. - Employment Particulars
A contract is not a legal requirement, but a statement of employment particulars is. Does your umbrella company provide these? If not they are operating in contravention of Employment Law. - Stakeholder Pension
A stakeholder pension must be offered to you, even if you decide not to join. This is a legal requirement.
