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What Is An Umberalla Company?

Simply put an Umbrella Company is a company that provide a method of payroll and act as an employer to independent contractors working under temporary contracts through an employer or recruitment agency.

If you manage to secure a contract through a recruitment agency they will ask you how you intend to invoice for the work carried out, you can do this through your own limited company but many contractors don?t like the responsibility calculating your income tax and national insurance contributions so will seek an umbrella company to manage these affairs for them.

An umbrella payroll company acts as an employer to contractors and freelances who usually work under temporary contracts. In simple terms, an umbrella payroll company enables you to have the freedom of contracting and be paid without having to incur the cost and responsibility of setting up and running your own limited company. Joining MSL Forza is a safe, reliable and fully HMRC-compliant employment. At a stroke we take away the stresses that you would normally face in running your own company, by dealing on your behalf with all income tax and National Insurance calculations, invoicing, credit control, expenses etc.

When making your decision on which umbrella payroll company to join, you should ensure that they are fully compliant with tax legislation and HMRC?s regulations and only agree to claim legitimate business expenses for you.
Payment is made to you via PAYE (Pay As You Earn) which is the same as through permanent employment however the difference being that through an umbrella company you are able to claim for legitimate business expenses, you will however be liable for both employee?s and employer?s national insurance and the reason for this is because an umbrella company will make payment with the understanding that your contract falls inside IR35. For further information regarding IR35 visit our guide to IR35 for a comprehensive manual.

There are many umbrella companies to choose from, many of which look slick and professional, but unfortunately aren?t. Our advice to you, when considering which one to join, is if you are being promised something that sounds too good to be true, then it probably is. The taxman is ever-vigilant and can soon claw back your hard earned cash, plus interest and even penalties, if you have claimed for something you shouldn?t!!

All umbrella companies are governed by the same rules and regulations stipulated by HMRC and in effect should provide the same service, payments are made through PAYE and claimable legitimate business expenses are also dictated by HMRC. Check out our guide to ?Choosing an Umbrella? to reveal some of the underhand tactics and marketing ploys that may be used to gain your attention.




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