Whilst the changes to IR35 have been delayed until April 2021, you may find that your end client continues with their plans to cease engagement with limited company contractors outside IR35. If this is the case you will need to choose a PAYE solution. How much choice you have may depend on the agency and client, but for most contractors in this situation employment with an umbrella company is by far the best of the options available. In this article we’ll break down the advantages that umbrella has over the other possibilities.

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Continuous employment

You will have a single, continuous period of employment for as long as you choose to stay with the same umbrella company, even if you work for many different clients and agencies.

This simplifies your employment history and can make it easier to access credit and mortgages. It also means that the employment rights we’ll talk about in the next section apply even when you’re between contracts or taking a break.

Employment rights

Because you’ll be employed by your umbrella company, you have all the rights, protections and benefits that UK law gives to employees. These include:

• Paid holiday
• Sick pay
• Maternity/paternity pay
• Access to a workplace pension

It’s worth noting that you would not have all these rights if you chose another model, like Agency PAYE for example, and you’d have no rights at all between contracts.

Pension auto-enrolment

All UK employers, including umbrella companies, are required to provide and contribute to a pension scheme for all qualifying employees. If you qualify you will be enrolled onto the umbrella company’s pension scheme.

If you have an existing pension of your own, the umbrella may be able to contribute to it on a salary sacrifice basis. It’s likely that pension contributions feature in your tax planning strategy, so we’d advise that you choose an umbrella company who can contribute via salary sacrifice.

Choose your umbrella company carefully:

Before signing up with an umbrella company you should find out:

• Are they accredited by FCSA? This is very important as it’s the best way to ensure your umbrella company are compliant, and protect yourself from risky tax-avoidance schemes. Avoid any umbrella who are not accredited.
  
• Can they make contributions to your existing pension? Your umbrella company may or may not be able to contribute to your existing pension via salary sacrifice, or allow you to control the value of your contributions. Find out what their policy is before signing up.
  
• Do they offer any additional benefits? These can make a significant difference. For example, Orange Genie Umbrella employees get access to Orange Genie Edge, which includes benefits designed to make their money go further, help them care for themselves and their families, and get more out of contracting.
  

If you have any questions or if we can help in any way, please call our expert team on 01296 468 483 or email info@orangegenie.com.