There are hundreds of umbrella companies in the UK – over 500 to be precise. However, with so many umbrella companies, how do you know whether you’re getting value for money? Keep reading, and we’ll explain whether or not there is such thing as an umbrella company discount and what you need to keep your eyes out for.
Do umbrella company discounts exist?
Yes! However, there is more to it than simply saying “yes”. Let us explain.
The only thing that umbrella companies can “discount” is the margin they deduct each payment frequency (the amount to cover administrative costs etc.). For example, the lower the margin, the better value a contractor will get from the umbrella company. However, it’s not as black and white as this.
You must choose a compliant umbrella company with a good reputation – to ensure you get high-quality customer service. Is it worth saving £1 per week on the umbrella company margin if it means using an umbrella company with terrible service? We think not!
Many umbrella companies offer their employees several extras as part of their package. These can include free insurance cover, employee rights, rewards schemes, Same Day Faster Payments, and more. Therefore, it’s all well looking for an umbrella company discount. However, we recommend you find one that provides you with the best value for money. It can certainly be argued that you get what you pay for.
Are there any misleading umbrella discounts out there?
Be careful when shopping around for an umbrella company discount. You must understand every compliant umbrella company processes its employees’ payroll in the same way – PAYE. The only thing that’ll vary between providers is the margin they deduct for their service.
To help make life easier, we’re going to create a short example. Let’s say there is a worker with a daily rate of £350 looking at two umbrella companies. Umbrella company A is a compliant provider in Manchester with a margin of £15 per week. Umbrella Company B is a compliant provider in Southampton with a margin of £15 per week. In theory, the worker should retain the same amount of take home pay to the penny with both providers. This is because they have the same margin.
Sadly, there are also plenty of umbrella companies promoting tax avoidance schemes. These companies are actively targeting vulnerable contractors, freelancers and temporary workers. Never be tempted to engage with an umbrella company that advertises unrealistically high take home pay retention.
If you use an umbrella company, you will receive your net salary after deductions have been made (PAYE). This is done in accordance with HMRC’s rules and regulations. Any “umbrella company” that offers you higher pay retention (compared to PAYE) is almost certainly operating unethically. Engaging with a non-compliant umbrella company could land you in serious trouble with HMRC, and they may issue you with a life-changing penalty.
The difference between real offers, and unethical promotions
It’s crucial you can distinguish between a genuine umbrella company discount or special offer (from a compliant provider) and an offer that’s too good to be true (from a non-compliant provider). Here are some examples:
- Two weeks free – this should be fine, and it means the umbrella company will not deduct a margin for two weeks.
- Free £50 Amazon voucher – this should also be a legitimate offer. Still, you will probably need to remain with that umbrella company for a specific number of weeks before you can claim the voucher.
Offers that you should avoid
- Pay less tax – while it’s a vague statement, some non-compliant umbrella companies advertise their service as being able to help you pay less tax. Avoid these arrangements!
- 90% take-home pay – Any umbrella advertising inflated pay retention should be avoided because it’s clear they’re not abiding by HMRC’s rules and regulations (PAYE).
Looking for a genuine umbrella company discount?
We’ve created a top 10 umbrella companies list to help our readers find a compliant and trustworthy provider. It’s a good idea to check them out – because some of them have genuine umbrella company discounts at the moment. That’s right – a few are running special promotions and have amazingly competitive margins at the moment. Check them out! Oh, and they’re all accredited by either the FCSA or Professional Passport!