Umbrella companies explained… in a nutshell.
An umbrella company has two primary functions:
- To act as an employer for agency contractors, and
- To provide an efficient and accurate PAYE payroll service for agency contractors while ensuring those who are eligible to claim employment expenses remain compliant.
This is the only business activity an umbrella company will carry out as an employer. Its sole income is that which is brought in by its employees and covers all the costs related to the umbrella company’s function of being an employer.
- A permanent employee working in one place cannot be reimbursed for his/her expenses of travelling to and from work, without having to pay tax on them.
- A temporary employee working in one place for the length of the employment is in the same position.
- However, a permanent employee whose job is to work on assignments in a succession of qualifying temporary workplaces can be reimbursed those expenses, without having to pay tax on them.
The umbrella company process…
- Get registered
To join Cloud9, simply fill out the quick registration form on our website, or if you prefer talking to a human, you can register with one of our PAs over the phone.
- Proof of ID
Once you’ve signed up, you’ll need to provide us with proof of ID, your address, and P45. We will then get in touch with your agency to request a copy of your contract.
- Submit your timesheets
At the end of each week or month, you’ll need to submit your timesheet and expenses for that period to the online portal. Don’t forget to keep hold of your receipts otherwise your expense claims will not be accepted.
We will then invoice your recruiter or end client.
The next step will be to pay you the net salary after the deduction of income tax and National Insurance, and reimbursing you the allowable employment expenses.
- At the end of the year…
We will provide you with a P60 and P11D for any expenses claimed, or a P45 upon resignation.