While self-employment has seen a dip over the past few months, it is apparent that this means of employment is poised to make up a significant portion of the labour market. As of the end of 2020, more than 4.5 million people were self-employed, despite even the current unpredictability of the economy. Self-employment will help shape the market in the years to come.
Becoming self-employed can be a daunting prospect for anyone, regardless of its rise in popularity. However, starting off contracting through an umbrella company can help lighten the load while opening you up to a range of benefits. Here are five Umbrella Company benefits that could be of use to you.
One of the main reasons umbrella companies exist is to ensure you aren’t bogged down by the administrative work that comes with running your own business. Send over your timesheet to your umbrella company. They will take it from there, leaving you with more time to increase your earnings.
An umbrella company will calculate your take-home pay by taking your earnings and deducting expenses, such as tax, from them. This allows you to see at a glance where your money is going and know that your obligations are covered. Leaving you to enjoy your wages hassle-free.
Choosing to work with an umbrella company can benefit contractors by offering a means to recover certain expenses. Before the 2016 Finance Bill, a wide array of expenses could be claimed. Such as transport, accommodation, training, and other expenses like this. However, much of these expenses fall under day-to-day costs and can no longer be claimed. This doesn’t mean that umbrella companies can’t help with claiming expenses anymore; pre-agreed expenses can be recovered from clients, often without being subject to taxation.
Using an umbrella company can help contractors make their money go a bit further as a result. Without the need for tackling the typical paperwork or opting to take the hit to earnings to avoid the headache.
One of the downsides to being self-employed is the difficulty in providing the statutory payments affording to salaried employees. These payments include maternity/paternity leave, holiday pay, sick pay, and so on. A survey carried out by The Freelancer, and Contractor Services Association found that a shocking 76% of polled freelancers and contractors had no means of providing this cover for themselves and their business.
By joining an umbrella company, you are treated as an employee that receives wages through PAYE. Because of this, you open yourself up to the range of protective benefits afforded to employees while not being subject to the typical constraints of working for someone else. This means you can have peace of mind that your business will not be negatively affected should you need to take a sick day or welcome new addition to the family.
Umbrella companies give you the opportunity to work in a way that best suits you. If you want to try out contracting before committing to it as a full-time career, work a few shorter contracts to plug the gap between salaried employment, or want the means to earn extra money alongside permanent work, then working with an umbrella company provides you with a flexible and easy method of achieving these aims.
In addition to working around you, umbrella companies can offer lifestyle benefits that are often available to employees. These benefits can include clinical counselling, legal support, critical incident support, and dependent care benefits. You should check with your chosen umbrella company what packages they offer and whether they include the support you might need.
Choosing an umbrella company doesn’t just trade traditional employment constraints with newer ones. In fact, it offers quite a lot of freedom. You can review your situation at any time and easily decide if staying as an employee is the right choice for you or if it’s better to change to a limited company.
IR35 is a piece of legislation implemented in the UK in April 2000. It was intended to combat tax avoidance and essentially seeks to tax “disguised employment”, which is when a contractor is paid through an intermediary rather than directly. This is most often done through their own limited company rather than their client.
A fantastic benefit to working with an umbrella company is avoiding the headache of falling afoul of IR35. You don’t need to worry about being inside or outside IR35. You are simply an employee as far as the law and the Treasury are concerned.
If the benefits of becoming an umbrella employee sound appealing, and you are ready to take the plunge into the world of contracting, then good news! The team at Umbrella Options is happy to help you get the information you need, and more importantly, get started with contracting. For more information regarding Umbrella Company benefits get in touch.