If you’re looking into becoming a contractor or have already been working as one for several years, there are a range of benefits that you can take advantage of that will take a lot of the legal headaches, such as tax returns and self-assessments, out of your hands so you can focus on your earning potential.

An Umbrella company allows for contractors to gain a lot of the same benefits and support that a full-time employee at a business would receive.

If you’re a contractor, you are essentially running your own business.

This means that you have to file your tax returns, hire an accountant, keep track of invoices, and account for every other legal requirement and administrative task that is involved with keeping yourself compliant with HMRC as a business owner/sole trader.

Companies such as NASA Group, Giant, JSA, Parasol, and Orange Genie take care of all of your aforementioned admin and legal requirements so you can use your time to complete more projects and increase your earning potential with the time you will be saving.

Aside from removing the burden of having to ensure your legal compliance, using an umbrella company will also provide contractors with a host of employee benefits of which would otherwise be unattainable without the introduction of one of these companies.

As previously mentioned, umbrella companies give contractors a great deal of assurance and peace of mind when entering into the world of contract-based/flexible working.

Due to the feedback of the contractors we work with signaling that the use of umbrella companies would greatly benefit them in their work lives, we work extremely closely with these companies to provide the best solutions possible to our highly valued contractors.

There are major benefits to developing a partnership with umbrella companies such as not having to submit your own self-assessment tax returns and receiving employee benefits.

Taking the weight of essentially running your own business off of your shoulders is a major benefit for contractors, below we have listed more of the advantages of working with an umbrella company that gets fed back to us by the contractors with whom we work.

• You don’t have to concern yourself with any administrative tasks related to paperwork and finances e.g. invoicing and payroll etc. This is taken care of by the umbrella company as if you were a contracted employee within their business.
• No need to complete your annual self-assessment tax form for work-related directly to your contract under the umbrella company.
• If you would like to try out contracting after leaving a full-time position etc. then this is a great way to ‘test the waters and see if contracting/flexible working is for you. Not having to set up a limited company straight away offers a less stressful way of entering this type of work.
• Pay packets get paid straight into your personal bank account as opposed to a separate business account.
• Oftentimes, umbrella companies will also offer discounts to various companies and subscriptions as if you were receiving employee benefits as an employee.

Due to payments coming through the umbrella company as opposed to relying on hearing back from a sent invoice, payments are oftentimes made a lot quicker. This is something that a lot of umbrella companies will pride themselves on as this is an important benefit for prospective contractors.

With long-standing relationships being built with the companies who need contractors, umbrella companies will have a developed relationship with the business of whom you will be conducting work for.

With companies like JSA Group having over 20 years experience within the contracting industry, support with any internal issues in regards to your contract or handling of business can be resolved with the umbrella company acting as a trusted intermediary.

As a contractor, you are usually not entitled to the same benefits that a full-time employee would be receiving.

Certain benefits such as pension contributions, company discounts and loyalty schemes, sick pay, and maternity/paternity leave are all examples of what you would otherwise miss out on if you were not working under an umbrella company.

To receive pension contributions, for example, you will have to be earning over £10,000 per year and conduct the majority of your work within the UK.

Working for a company such as JSA Group will see you be automatically enrolled into the company’s pension scheme as you are considered an employee.

Before deciding to work with an umbrella company, aside from checking their compliance with the new IR35 reform, FCSA and APSCo accredited compliance and accreditation is a good barometer to judge an umbrella company by as well.

Before enlisting the services of an umbrella company, it is extremely important to check that the company you are intending to work with is IR35 compliant.

New reforms to IR35 made in April 2021 have caused a lot of discussion within the contracting and flexible-working industry.

This reform involves shifting the risk from contractors to the end-client and affecting the number of tax deductions being made to the contractors pay packet.

Ensuring that the umbrella company that you are working with is compliant with the new IR35 reform is in the best interest of you, the contractor.

If you’re unsure about what IR35 is and how the new IR35 reform can affect both umbrella companies and contractors, take a look at the video below for an in-depth look at why the new reform is so important to be aware of.

Overall, the majority of contractors that we have spoken to prefer to work within an umbrella company due to one major factor when it comes to essentially running their own business… ease.
Below we have listed the main benefits that the contractors that we work closely with have fed back to us.

Being FCSA accredited is considered to be the ‘gold standard’ within the industry due to the rigorous testing procedures involved to ensure the compliance of umbrella companies with HMRC amongst other regulations and standards.

Becoming FCSA accredited is an esteemed accomplishment as it requires each company to abide by a set of prerequisites in order to receive the accreditation.

• A minimum of 2 years successful operation and 1 year’s full accounts for the service seeking accreditation
• A minimum of 75 contractors successfully supported by the service seeking accreditation
• Minimum financial liquidity requirement of at least 2.5% of the margin

JSA Group is an example of a company that is FCSA accredited and they have undergone the rigorous testing procedures required for the accreditation process. With the current chair of the FCSA currently acting as head of accounting operations for JSA Group, you can be assured that all regulatory standards and requirements are being met without question.

Finding an umbrella company that offers all of the aforementioned benefits and peace of mind when carrying out contracted work may seem as though they are difficult to find.

Luckily, here at Lucid Support, we have been fortunate enough to work with some of the best umbrella companies in the business.

With decades of experience and having helped over tens of thousands of contractors in the UK, we are proud to be working with the following umbrella companies:

• JSA – With over 20 years of experience, JSA group is an extremely knowledgeable company that understands every aspect of how to run a business. With FCSA chairman Chris James at the helm of the business, you can be assured that you are in safe hands.
• Parasol – Set up by former contractor, Rob Crossland, Parasol is dedicated to making the life of a contractor as easy as possible. With over 21 years experience, 100,000 contractors and 3,000 agencies worked with under their belt, Parasol is one of the leading names in umbrella companies within the UK.
• Nasa Group – Are a low cost, high-value umbrella company, recommended by contractors and agencies alike. With over a 4.3-star rating on Trustpilot, Nasa group is a well-trusted name in the industry.
• Giant – Since 1992, Giant has provided specialist, end to end workforce management software and support services for organisations of all sizes. Globally.
• Orange Genie -FCSA Members, compliance is in everything we do. Our Free Edge Platform for all contractors is focused on your health, wellbeing & making your salary stretch further. We employ & pay thousands of contractors like you every week. Our experience & knowledge means we take care of the things that matter to you, allowing you to focus on your job. We want to improve the lives, opportunities, and the well-being of contracting professionals.

If you’re a contractor or looking to leave a full-time job to start a more flexible working lifestyle, an umbrella company offers a wide range of benefits that will not only save you time but will greatly reduce the amount of stress and administrative burdens that you will have to take on allowing you to focus on increasing your earning potential.

One of the biggest stressors on becoming a contractor that gets communicated back to us here at Lucid, are the administrative tasks and setting yourself up as a limited company.

We take pride in finding the best solutions possible for the contractors that we work closely with and partnering with some of the leading umbrella companies here in the UK.

Utilising the experience, business acumen, and support systems that has been developed over several decades has been crucial for securing a positive working experience for all of the contractors that we work with.

Interested in how you can pass an interview and get the projects and contracts that you want? Take a look at our article on our best interview tips that have helped our candidates get the jobs they deserve.

Written by Lucid Support