Umbrella payroll company
The term
umbrella company covers a broad range of organisations offering disparate services to contractors.
An umbrella payroll company provides a back-office administration service to freelance contractors. Unlike a PAYE
umbrella company their is no employment relationship between the company and the contractor
Generally this administrative service will include the preparation and submission of the contractor's invoice for which a charge, often as much as 5%, is levied based on the invoice value.
On receipt of funds the payroll company will calculate the PAYE and National Insurance due to be paid. The contractor will have responsibility to submit the sums due to HMRC and to complete their monthly and annual returns.
The contractor will not be able to claim business expenses as there is no overarching contract of employment in place. Each assignment will be treated as a discrete job and based on HMRC regulations the workplace will be regarded as a permanent place of work.
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