General FAQ's

An umbrella company is a business that contractors and freelancers can work through for assignments, as an alternative to setting up a limited company.

An umbrella company employs contractors, giving them the freedom to work on different contract assignments, whilst paying them under PAYE. In this way it offers a simple solution that is fully compliant with IR35.

Working under an umbrella company is just one option open to contractors, but is popular among those captured by IR35 by offering a cost-effective and fully-compliant way of getting paid on a PAYE basis.

No. You don’t have to be paid through an umbrella PAYE solution, but if you are permanently IR35 captured it may be your best solution.

Joining an umbrella company is easy. Once you have found an organisation offering umbrella solutions – such as Brookson – you just need to gather the appropriate documents and complete a simple onboarding process.

No. IR35 legislation applies to individuals who provide their services via a limited company.

As an umbrella employee, you are taxed at the same rate as any permanent employee: 20% if you earn within the basic rate tax bracket, 40% if you earn within the high rate tax bracket and 45% if you earn within the additional rate band.

PAYE stands for Pay As You Earn. It is a method of paying income tax and National Insurance contributions and is used by all employers operating a payroll in the UK.

Umbrella companies pay employees using the standard PAYE system, calculated the same way for all employees in the UK. This is applied to your salary after their margin and employer costs have been retained from your gross contract rate.

Typically, the costs of working through an umbrella company are less than running a limited company, although without the tax advantages. For any contractor captured permanently under IR35, it can be the best way to work in compliance with HMRC guidelines.