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Umbrella Company’s
Recruitment Agencies require you to invoice using a Limited Liability Company. This can be done from your own limited company (often referred to as a Private Limited Company) or from a Managed Service Company (often referred to as an Umbrella Company). There are a few Recruitment Agencies that will allow you to trade “PAYE”, through their own payroll service. Because this tends to be the least tax efficient option available, most agencies are moving away from this service in favor of Umbrella Companies.
Introduction
When deciding on a payment structure contractors can either choose to run a limited company themselves or use an umbrella company.
How do Umbrella Companies work?
With an umbrella company you become an employee of the company. Each week or month you instruct them to invoice the agency/client based on your time sheet. They then pay you a net salary after deducting national insurance contributions and income tax on all your earnings.
After securing a contract you instruct your agent to send a contract to the umbrella company for signing. You do not sign the contract yourself. Instead there will be a contract in place between you and the umbrella company. Joining an umbrella scheme is very quick. If you do not currently have one then you can wait until you have a firm offer before deciding which one to join.
Causality.IT preferred suppliers are:
Parasol
Nasa Consulting
This link is also very helpful for new contractors: click here