How to identify the worst umbrella companies in the marketplace

Our website is full of useful information to help contractors and freelancers identify the UK’s best umbrella companies. However, we haven’t dedicated an article that explains how to identify the worst umbrella companies. Therefore, we’ve collated 9 points that we think you need to be aware of.

Whatever you do – make sure you pick a reliable and compliant umbrella company. Not only do the worst umbrella companies have awful customer service, but they could land you in serious trouble with HMRC!

Negative reviews

Who doesn’t look at reviews for products and services before deciding whether or not to go ahead with a purchase? If you don’t – shame on you! We highly recommend you look at the reputation of an umbrella company before committing to using their service. After all – it’s flaming obvious – the worst umbrella companies will have the worst reviews! Have a look at reviews on Google and Trustpilot.

Misleading calculations

We despise umbrella companies that provide their potential employees with misleading calculations. Unfortunately, it’s fairly common. Make sure you understand the take home pay calculations you’ve given by an umbrella company, and do not hesitate to raise any concerns that may occur. Some umbrellas will give you a calculation with an extra high take home pay retention – to trick you into joining them over the others. Remember, every compliant umbrella company will process your pay in exactly the same way (PAYE). Therefore, you’re take home pay should be very similar – regardless of which provider you use. The only thing that varies is the margin the umbrella company charges, which leads us onto our next point…

High Margin

The margin is the only thing that should alter between umbrella companies. Therefore, it’s in your interest to pay a lower margin – as it’ll help you retain a few extra pounds. We’ve noticed some umbrella companies with a really high margin, and one that we don’t think they can justify. Typically, you expect an umbrella to have a margin of between £15 and £25 per week. If you’d like more information, have a read of our article entitled ‘£30 A Week For An Umbrella Company Margin? No Thanks!

Poor customer service

When you join an umbrella company, you become their employee and technically they’re your employer. Therefore, make sure you are confident the umbrella you choose has a good level of customer service! The worst umbrella companies are difficult to get hold of, have hardly any information on their websites and are generally inefficient.

Tax avoidance schemes

Never be tempted to use a tax avoidance scheme. Any umbrella offering you the chance to pay less tax, retain more of your cash, and so on, is probably a tax avoidance scheme. Engaging with a tax avoidance scheme is a terrible idea. HMRC are always stepping up their efforts to catch people who engage with such schemes and the consequences could prove to be life-changing. Take it from us – the very worst umbrella companies are tax avoidance schemes! Never use one.

If HMRC is investigating a potential tax avoidance scheme, they will issue it with a Scheme Reference Number (SRN). Therefore, make sure any umbrella company you’re considering using does not have a SRN, or a negative track-record with HMRC.

Rubbish website

The worst umbrella companies will not take pride in their website, and this is an obvious sign that an umbrella company is worth avoiding. Make sure you only use an umbrella company with an informative website that sets out to answer any questions you may have before signing up. Plenty of umbrella companies are popping up all over the place, but most have uninformative websites. Make sure you can fully trust the umbrella you register with.

If you have an umbrella company in mind – check out their website. There are loads of awesome sites out there – full of useful information.

Poor online portal

The best umbrella companies will provide their employees with access to an easy-to-use online portal. This allows you to upload timesheets, view payslips, etc. The worst umbrella companies will not offer this service, or they’ll have an ancient portal that’s not user-friendly.

It’s increasingly common for established and trustworthy umbrella companies to offer online portals that are powered by a third party, such as My Digital.

Lacklustre onboarding process

When you register with an umbrella company, they require a lot of information from you – such as address, date of birth, proof of ID, assignment information, etc. This is a legal requirement and the umbrella is not asking for this information to annoy you! If you don’t think an umbrella company is taking the onboarding process seriously, there is a chance they may pay you non-compliantly – or they won’t pay you at all.

Also, while we’re discussing the onboarding process, it’s vital you understand everything to do with your umbrella company. The onboarding process is an opportunity for you to ask questions so that you’ve entirely comfortable with how PAYE umbrella payroll works. The worst umbrella companies will see the registration process as a numbers game – and will try and sign up as many people as possible – in a short space of time.

When you join an umbrella company – you should never feel rushed.

No accreditation

The worst umbrella companies in the UK will not have a prestigious accreditation from an industry body. Without an accreditation – the umbrella company is not able to prove they operate compliantly.

We recommend you only use an umbrella company that has obtained accreditation from a well-respected industry body – such as the Freelance & Contractor Services Association (FCSA) or Professional Passport.

Top 10 umbrella companies

Right then! Now let’s discuss the best umbrella companies! We’ve collated a list of the top 10 umbrella companies and we think you’ll find it really handy. Each umbrella company is accredited by the FCSA and some of them have some wonderful offers on at the moment.

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