Glossary · UK
What is Umbrella Company?
A PAYE employer for contractors — handles tax/NI in exchange for a margin fee.
Full Definition
An umbrella company is a third-party employer used by UK contractors, especially for inside-IR35 assignments. The umbrella receives your assignment fee, deducts employer NI (15%), Apprenticeship Levy (0.5%), its margin (£15-30/wk), then pays you the rest as PAYE salary with employee Income Tax and NI deducted. You get statutory employment rights (holiday, SSP, SMP, pension auto-enrolment). Avoid umbrella «loan schemes» and «mini-umbrella» fraud — HMRC Loan Charge has caught thousands. Use FCSA-accredited umbrellas.
Read More
See Also
Disclaimer: Definitions are for guidance only. For decisions about your tax, savings, property or pension situation, always consult a qualified professional or refer to gov.uk.