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Choosing the right umbrella company as an interim: red flags to look out for

Admin is a chore on the best of days, especially when it involves taxes. That’s why working with an umbrella company can be super beneficial as it means you don’t have to worry about tax deductions or national insurance contributions as it will be worked out on your behalf! 

Having said this, it is crucial you choose the right company to handle your finances, otherwise you could risk getting in serious trouble with HMRC. In this blog, our consultants share expert insight into choosing the right umbrella company as an interim. Here are some red flags to bear in mind during your search…

It’s too good to be true

You know what they say – if it’s too good to be true, then it probably is. A major red flag to look for is if the umbrella company you’re looking at working with claims to lower your tax bill. A take-home of more than 85%, for example, means the umbrella provider is likely engaging in tax avoidance. Two words: stay away!

Your payslip is different to your bank statement 

It’s always a good idea to check your payslip at the end of each month to check that there haven’t been any errors. Make sure to check the amount also matches what your payslip says. If you’ve been paid more than expected it’s unfortunately not your lucky day – the company you’re working under has likely not paid the correct tax and NIN amounts and you will have to pay it back eventually. Sorry to be the bearers of bad news…

They aren’t accredited 

While most umbrella companies are compliant with tax rules, there are sadly a few bad eggs out there. And although umbrella companies aren’t regulated, you can check whether they are accredited by FCSA or professional passport. This shows that they are likely compliant with HMRC tax rules.

Remember, never sign up with an umbrella company that you aren’t sure about! If you have any concerns, you can always speak to one of our experienced consultants via [email protected].

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