An umbrella payroll company offers its services to freelance contractors in the United Kingdom. The corporation takes on the role of employer to contractor when they are working through either a recruitment agency or for a client directly.
A freelance contractor can choose to go it alone and look after meeting their tax obligations themselves, but this takes valuable time away from running the business and generating earnings. Since the fees involved with engaging an umbrella payroll company to look after your PAYE (Pay As You Earn) needs are tax deductible, you get the expert advice you need and a break on your Tax Payable.
With everything that you currently have going on to earn your contracts, not to mention performing the work once you have the contract in hand, do you really have time to learn to become a tax expert? It is certainly hard to find the time to learn everything you need to know about staying compliant with the rules. A better choice is to find a company that provides umbrella payroll services.
If your goal is to avoid being adversely affected by HM Revenue & Customs’ IR35 regulations, then working with an umbrella payroll service can help you reach that goal. Once you have engaged one for your payroll needs you are no longer a freelance contractor for tax purposes. Instead, you assume the legal status of an employee. As such, you will receive pay advice that complies with HMRC regulations on a regular basis, as well as a P60 at the end of the year.
When an employee receives his or her wages from their employer, any income tax owed by the employee is withheld and forwarded to HMRC on the employee’s behalf. Signing on with one of the umbrella payroll services means the company looks after withholding your income tax for you and you will always remain tax compliant.
There are distinct advantages to becoming a freelance contractor. Since a freelance contractor is not an employee, the company hiring one does not have to pay benefits such as holiday pay or sick pay. They are free to get the help they need, for a limited time if necessary. Freelancers are generally paid at a higher rate than employees to compensate them for the lack of paid benefits.
A freelance contractor also has the freedom to work for a series of clients if they so wish. Depending on the kind of work that they do, the freelancer can work for more than one client at a time. They can also move onto the next assignment without having to give notice first.
Another advantage of becoming a freelance contractor is the freedom to take holidays whenever you want or need one. Unlike an employee who is limited by a certain number of days of annual leave, the freelancer doesn’t have these kinds of restrictions. When the freelancer signs up with an umbrella payroll company, they can get the best of both worlds.
ABOUT THE AUTHOR :-
Madlina Francis is a freelance writer and retired accountant who enjoys writing about umbrella payroll During her career, she has written about several topics, many on the subject of umbrella payroll services.