Employment Status
Are you a contractor? If you work for someone else, it is important to know whether you are working for that person in an employed capacity or in a self-employed capacity as an independent contractor.
How does a PAYE Umbrella work?
With a PAYE umbrella company you become an employee of the company. Each week or month you instruct them to invoice the agency/client based on your time sheet. They then pay you a net salary after deducting national insurance contributions and income tax on all your earnings.
What is an Umbrella Company
An umbrella company is in simple terms an outsourcing of your payroll. Rather than having the cost and hassle of setting up your own limited company you can work via an Umbrella Company.
Important questions
Asking these questions should give you an idea of what it will be like working with them. Your relationship with your umbrella company is important, so don't make your decision lightly.
Where umbrella companies come from
Umbrella companies were spawned following the introduction of IR35 back in April 2000 and became hugely popular after the Management Service Company Legislation in April 2007. They are seen as one of the last remaining 'compliant' payroll methods, taxing contractors fully under PAYE, after the deduction of allowable business expenses.
What you need know
If you've just decided to start contracting you probably don't know what questions you should be asking.
