What to look out for when comparing umbrella companies; making sure that you're working in a safe and tax compliant way.
It can sometimes be tricky to pick an umbrella company; with all the different options around service levels, benefits and net pay it can seem like a bit of a minefield.
Below, we've outlined some of the important facts, along with key things to look out for to make sure the umbrella company you choose as your employer are operating as they should.
Nasa Umbrella are an accredited FCSA member, which is the gold standard of compliance in our industry. You can read more about our membership by clicking the icon below.
All compliant umbrella companies deduct set percentages in line with HMRC. This means that your take home should not vary much between compliant umbrella companies (a few pounds or pence here and there). This is because the only thing that an umbrella company can legally decide is the margin that they retain for their services. Nasa are fully compliant with all HMRC legislation, and are fully accredited FCSA members, meaning you have complete peace of mind about compliance as one of our employees.
Unfortunately, there are numerous companies out there marketing themselves as umbrella companies who are not making the correct deductions.
Any company offering you a significantly higher take home pay are highly likely to be operating some type of tax avoidance scheme. HMRC are well aware of these schemes and are actively working to track them down and reclaim underpaid tax. Using such a scheme could mean that you remain liable for any backdated taxes and associated penalties if these cannot be recovered from the company directly, or if the company were to cease trading.
Here are a few things to watch out for:
❌ Companies promising a really high take home pay percentage. If it seems to good to be true, then it probably is!
❌ Any companies based 'Offshore' ie outside the UK. These companies will often shut down unexpectedly and totally disappear - leaving their employees unpaid and often with an incoming tax bill.
❌ Loan schemes: any company who offer to pay part of your income as a 'tax free loan' or advise they can split your income into elements which are 'tax free'/ 'tax efficient' or claim to offer and kind of 'enhanced payroll' service. Earned income is taxable, and therefore should have tax applied at the relevant bandings. If tax is not applied to the payment initially, then the tax is still owed to HMRC.
❌ Companies who claim to be endorsed or accredited by HMRC. HMRC do not endorse or promote any company in this way.
❌ Companies who do not hold any type of independent accreditation, such as FCSA membership.
❌ If a company are unable to provide you with a comprehensive payslip breakdown with all deductions clearly shown then steer clear. Everything should be shown in a clear and transparent way.
❌ If there are any hidden charges for things such as P60 / P45 / references etc
❌ Assurances you can claim tax relief expenses on travel to and from work without any tax implications. In reality this is no longer possible, due to the supervision, direction and control legislation which affects all umbrella workers
If you have any concerns about an illustration or any information you've received, or want to run anything past us if you feel it doesn't seem 'quite right', our onboarding team are always happy to help. They are knowledgeable, friendly and highly skilled at spotting anything unusual! Our goal is for you to feel confident and secure when choosing a transparent and compliant Umbrella Company. Feel free to give us a call on 0117 929 7683(1) pop us an email - sales@nasagroup.co.uk or chat to us on our Live Chat.
We've included some helpful links for you below:
HMRC information regarding tax avoidance schemes specifically aimed at contractors
Information about HMRC's tax avoidance campaign
FCSA guidance on how to spot scams and those operating tax avoidance schemes
