How Umbrella Payroll Benefits Contractors

If you are a freelancer, consultant, or work independently from a company you may be faced with some unexpected payments in due course. So, it’s time to plan ahead and account for your expenses. 

Or it may be that you are unsure of being a Limited Company just yet, so being under an umbrella company is a perfect way to try out contingent worker’s benefits. Here are just a few of the many benefits.

8 reasons why being on an Umbrella Payroll can help your business:

Less admin

Being a contractor already comes with a huge amount of paperwork, but being with an umbrella company means you are essentially employed by one company instead of dozens. All the tax contributions are paid at the source, so you don’t have to work out National Insurance contributions at the end of the tax year.

Payment every week

You can be paid one week in arrears for the work you have undertaken, which is all done through the umbrella company. 

Speed and efficiency

As a contractor, you will be moving from project to project, in which case you may need to pass your compliance checks on time. To make this transition as smooth as possible, some companies work this into their package. Umbrella payroll from People Group Services allows you to upload documents and use facial-recognition software to confirm your identity, making it much quicker.

Following correct tax legislation

Umbrella companies take responsibility for understanding and following the right tax laws, so you don’t get a headache learning about the ever-changing legislation. IR35 is a tax law implemented by HMRC that will be catching contractors come April 2020. With umbrella companies, it is easy to avoid getting on the wrong side of IR35, which can reduce your income by 25% in taxes.

Discounts on taxable items

While the contractor isn’t subject to supervision, direction, or control (the criteria HMRC use to determine if the service you are providing is fitting with the terms of a freelance service) they can claim on business expenses. Logging in expenses each week can mean an increase in take-home pay.

Flexibility

An umbrella company will often have an infrastructure, like easy-to-use apps so that you can easily access your information at any given time. This could come in handy if you are working on many projects, as all your necessary details are in one place.

Statutory Payments

If you are fairly new to freelance work, or even a couple of years into it, there might be some things that you have forgotten to accommodate for. That is until the day you become ill. Sick pay is often undervalued until the moment disaster strikes and you find yourself off work with no income to sustain yourself. With an umbrella company, things like sick pay and maternity leave are worked into your income. 

Mortgage and loan payments

Being hired by one employer officially can make it much easier to pass mortgage checks So if you are looking for a way to make your freelance work more reliable, you should check out some of the options available to you in the form of umbrella payroll. Doing so may give you peace of mind come to the end of the tax year.