1. Compliant umbrella companies provide vital services for contractors and recruiters

Legitimate umbrella companies have been unfairly tarnished by the activities of unscrupulous loan scheme operators, who are NOT umbrella companies.

Compliant payroll intermediaries like Exceed Contracting are fully transparent in their dealings, and make all proper tax and NI deductions for the benefit of contractors and recruitment agencies.

When comparing umbrellas, look for an independent compliance accreditation from the likes of PayePass and Professional Passport.

Exceed’s compliant status is guaranteed and insurance-backed by both PayePass and Professional Passport. 

You may also like to read our response to HMRC’s umbrella company compliance checklist here: Exceed’s Compliance Credentials

2. Compliant umbrella companies provide lots of benefits

Umbrella company solutions provide a host of advantages for temporary workers and recruitment agencies from employment and payroll and beyond.

The advantages of Exceed’s umbrella service for contractors include:

• One employer/tax code when working through multiple agencies
• All statutory benefits, including sick pay and parental leave
• Holiday pay – advanced or accrued
• PAYE payments – prompt, accurate and confirmed by text and email
• Claims for expenses/business mileage
• Support claiming expenses at year-end
• Increased pension – option to increase employer’s pension contribution
• Generous refer a friend bonuses

Exceed Contracting provides our FULL umbrella package as standard, with no hidden costs or charges.

Our comprehensive service includes five-star support for contractors, a dedicated point of contact, real-time payment updates, discount/rewards scheme, online learning academy, generous refer a friend bonuses and two compliance guarantees!

3. Compliant umbrella companies receive income and pay taxes, transparently

Critics of umbrella companies often focus on the apparent deduction of Employer’s National Insurance from contractors’ pay.

This is misleading, and a misunderstanding of the true situation which is that:

• The umbrella company is the Employer and is legally bound to pay Employer’s NI.
• Employer’s National Insurance is factored into the calculation of a contractors’ Assignment Rate (sometimes called an Umbrella Rate or Limited Rate).
• The Assignment Rate that is paid to an umbrella for an assignment is uplifted to fully cover the Employer’s NI deduction and other costs.
• The assignment rate, is NOT the contractor’s rate of pay. If they were not paid by an umbrella company, the contractor’s rate of pay would be lower than the Assignment Rate.
• Employer deductions are made from the uplifted Assignment Rate, and NOT from the contractor’s gross pay.

Unfortunately many umbrella operators have not been sufficiently transparent about this process, which has led to the development of this myth.

Compliant and reputable umbrella company operators like Exceed Contracting make the treatment of taxes crystal clear in their payslips and materials for contractors, as verified by independent accreditors like PayePass and Professional Passport.

4. Umbrella companies have been around for 20+ years

Whilst the needs and nature of the contracting market, and umbrella companies themselves, have evolved significantly in recent years, umbrella companies are not new, and have been around for more than 20 years.

5. Compliant UK umbrellas auto-enrol employees into a pension scheme

Contractors who are employed by umbrella companies hold the same pension rights as employees in any other type of employment.

In fact, as per the Pensions Act 2008, all UK employers – including umbrella companies – must offer a pension scheme and auto-enrol employees into it.

Exceed Contracting automatically enrols our umbrella service contractors into a UK pension scheme.

6. Compliant umbrella companies pay millions of pounds of PAYE and NI taxes to HMRC

Compliant umbrella companies like Exceed Contracting never offer take home pay rates anywhere near 90%, as they operate PAYE payroll with full tax and NI deductions made to HMRC.

The only difference in take home pay between alternative intermediaries should be down to their fee/margin for processing payroll.

Any umbrella promising significantly increased take home pay is most likely to be an unscrupulous loan scheme that’s best avoided.

7. Umbrella employees are outside IR35

This is a highly topical subject due to the massive IR35 turbulence caused by off payroll legislation changes in previous years.

IR35 is designed to deal with disguised employment; whereas with an umbrella company such as Exceed Contracting, contractors are employees of the umbrella and paid will full PAYE and NI deductions.

Got a Question?

If you have any outstanding queries about our fully compliant umbrella service for UK temps and contractors, please get in touch to Find Out More.