If you’re looking for a PAYE payroll company, it’s natural that you’ll want to make an umbrella company comparison and then choose the one you like the most. However, with over 500 umbrella companies to choose from, how do you know what makes a good umbrella company? Also, are you aware of a non-compliant umbrella company’s signs and the risks of engaging with one? This blog will look at the best way to undertake an umbrella company comparison – so you can be sure the umbrella you pick is the best.
Compliant umbrella companies will process the payments of their employees using HMRC’s tax system Pay As You Earn (PAYE). Therefore, when you’re making an umbrella company comparison, do not focus on the umbrella companies offering you the highest take home pay. PAYE is a legal requirement for umbrella employees, and any payroll provider offering significantly higher pay retention are probably a tax avoidance scheme.
When you ask around for an umbrella company calculation, don’t forget that compliant umbrellas will process your payroll in the same way. Therefore, in theory, every umbrella should be quoting you the same. But, unfortunately, some umbrella companies have been known to deliberately trick contractors into using their services by inflating their pay calculations. Don’t be a victim of this malpractice!
The only thing that will impact your pay retention between compliant umbrella companies is the margin they deduct each time you’re paid. For example, if there were two compliant umbrella companies, one with a margin of £15 per week and the other with a margin £25 per week, you will retain a few pennies more if you choose the umbrella with the lower margin. It’s really as simple as that.
Therefore, when you’re conducting an umbrella company comparison, searching for a compliant umbrella company with the lowest margin is a good idea. However, it’s not the only factor you should focus on.
The service an umbrella provides is really important. It’s a great idea to read about umbrella companies online and have a look at the Google and Trustpilot reviews. Also, ask around and see if any colleagues or friends are using a particular umbrella company and find out what experience they’ve had.
Ultimately, all compliant umbrella companies provide the same service – PAYE payroll. However, some will be better and offer greater customer service than others.
There are a lot of umbrella companies in the UK – over 500 in fact! Therefore, we’ve noticed a lot of umbrella companies promoting little extras as part of their service. This is done to try and win more business, and who can blame them?
Make sure you choose an umbrella company that provides you with value for money. Most of the little extras that are offered include:
- Free insurance
- Same Day Faster Payments
- Access to employee reward scheme, such as Perkbox
- Referral rewards (when you recommend a friend or colleague)
Don’t be fooled into thinking some extras are amazing when they’re not. For example, umbrella companies that advertise benefits such as employee rights are perhaps being a little misleading. When you register with an umbrella company, you become their employees, and as a result, you are entitled to employee rights. It’s not a benefit as such; it’s a legal requirement.
Frustratingly, a few umbrella companies have recently given the industry a bad name by acting unethically (for example, mini umbrella companies). When you make an umbrella company comparison, it’s imperative you only look at compliant umbrella companies. These will operate PAYE and will ensure you pay the correct tax and National Insurance Contributions to HMRC. Non-compliant umbrella companies (such as tax avoidance schemes) will promote inflated pay retention by helping you to pay less tax. Engaging with one may help you retain more of your money, but HMRC is retrospectively punishing users of tax avoidance schemes. As a result, you could face a life-changing fine in the future.
Our recommendation is simple – only consider using an umbrella company that is accredited by either the FCSA or Professional Passport. Not only will it make your umbrella company comparison easier because it’ll reduce the number of providers to look at, but it’ll also ensure you only consider engaging with compliant PAYE umbrella companies.
Hopefully, this article has provided you with helpful information to take on board when making an umbrella company comparison. Don’t focus heavily on pay retention because compliant umbrella companies will process your payment in the same way (PAYE). Instead, focus on the service they’re offering, the umbrella’s reputation and the margin they deduct each payment frequency. It’s also a great idea to only consider using an umbrella company with an FCSA or Professional Passport accreditation. We cannot stress this enough – it’s crucial you only consider engaging with compliant umbrella companies!
Top 10 umbrella companies
We’ve collated a list of our top 10 umbrella companies to help you with your umbrella company comparison. They’re all accredited by either the FCSA or Professional Passport, and some have exciting offers at the moment! Please check them out.