Umbrella company

In the United Kingdom, an umbrella company acts as employer to independent contractors who work under temporary contract, usually through a specialist employment agency. Recruitment agencies will only issue contracts to a limited company. Since the introduction of the Managed Service Company (MSC) legislation in the budget 2007, the only way an independent contractor can comply with this requirement is to set up his or her own personal limited company or use an umbrella company. An umbrella company issues invoices to the recruitment agency (or client) and, when payment of the invoice is made, will typically pay the contractor through PAYE (although historically the term has also been used for salary and dividend type payment structures).

Umbrella companies have become more prevalent since the British government introduced so-called "IR35" legislation that makes it less beneficial to start your own company and increasingly attractive to join an umbrella company []

In December 2006, the UK Treasury introduced the above-mentioned draft legislation "Tackling Managed Service Legislation," which seeks to address the use of "composite" structures to avoid income tax and National Insurance on forms of trading that the Treasury deem as being akin to being "employed." After a period of consultation and re-draft, the new legislation became law in April 2007, with additional aspects coming into force in August and fully January 2008. PAYE umbrella companies are effectively exempted from the legislation, which also seeks to pass the possible burden of unpaid debt (should a provider "collapse" a structure) to interested parties, e.g., a recruitment agency that has been deemed to encourage or facilitate the scheme.

Whilst many of the umbrella companies advertise similar offerings, much of the detail should be checked by the user. Often expenses are used as a selling point with potential abuse of "dispensation" (HMRC issue documentation to employers as a more effective way to record Expenses rather than as a method of generating more income) agreements. It is the independent contractor who will be liable should HMRC decide, for instance, that expenses have been incorrectly claimed.



Wikimedia Foundation. 2010.

Look at other dictionaries:

  • umbrella company — noun A company that acts as an employer to fixed term contractors, usually through an employment agency …   Wiktionary

  • Umbrella (disambiguation) — An umbrella is a canopy device designed to protect from precipitation or sunlight.Umbrella or Umbrellas may also refer to: * Umbrella (song), the 2007 s best selling single by Rihanna featuring Jay Z * Umbrella (album), an album by The Innocence… …   Wikipedia

  • Umbrella (песня Rihanna) — «Umbrella» Обложка сингла «Umbrella» (Rihanna, (2007)) Сингл Rihanna c альбома «Good Girl Gone Bad» Выпущен 29 марта, 2007 Формат CD, 12” Записан февраль …   Википедия

  • Company (film) — Company DVD cover of Company Directed by Ram Gopal Varma Produced by C. Ashwini Du …   Wikipedia

  • Umbrella Corporation — Infobox Company company name = Umbrella Corporation company company type = Fictional corporation and laboratory foundation = 1968 |location = Europe founder = Ozwell E. Spencer key people = Ozwell E. Spencer James Marcus Edward Ashford num… …   Wikipedia

  • Umbrella —  Pour l’article homonyme, voir Umbrella Corporation.  Umbrella Single par Rihanna featuring Jay Z extrait de l’album Good Girl Gone Bad …   Wikipédia en Français

  • Umbrella brand — An umbrella brand is a high altitude articulation of difference and benefits with several sub conversations captured beneath. It unites a series of sub brands with one voice, leaving room for each sub brand to engage in sub conversations relevant …   Wikipedia

  • Umbrella (song) — Infobox Single Name = Umbrella Artist = Rihanna featuring Jay Z from Album = Good Girl Gone Bad Released = March 29, 2007 (US) May 25, 2007 (Europe) May 28, 2007 (UK) Format = 12 maxi single, CD single, digital download Recorded = 2006 Genre =… …   Wikipedia

  • Umbrella — Para la ficticia corporación Umbrella, de la saga Resident Evil, véase Corporación Umbrella. «Umbrella» Sencillo de Rihanna junto a Jay z del álbum Good Girl Gone Bad Publicación 29 de marzo de 2007 Formato Sencillo en CD descarga digital …   Wikipedia Español

  • Umbrella organization — For the fictional company set in the Resident Evil videogame series, see Umbrella Corporation. An umbrella organization is an association of (often related, industry specific) institutions, who work together formally to coordinate activities or… …   Wikipedia

Share the article and excerpts

Direct link
Do a right-click on the link above
and select “Copy Link”

We are using cookies for the best presentation of our site. Continuing to use this site, you agree with this.