Answering your FAQs: contractors

Need some more clarity on how umbrella companies work? Our specialist team has collated some of our most frequently asked questions for your ease and convenience. 

What is my employment status when I work with an umbrella company in the UK? 

You’ll become a permanent employee of the umbrella company upon registration. From here, the umbrella company will deal with your finances, including tax deductions, insurance and payroll processing. 

What do umbrella companies ask for upon registration? 

Upon registration, you’ll be required to provide the umbrella company with your basic personal information such as full name, contact details, National Insurance Number and the relevant information about the end-client. You will also be asked whether or not you’re paying back a student loan and which payment plan you are on (check this here). 

Is it free to join an umbrella company? 

Yes, there are no fees for joining an umbrella company. If the umbrella you want to register with tries to charge you for signing up then you might want to err on the side of caution. 

What fees will I be charged by an umbrella company?

When working with an umbrella you’ll pay a weekly timesheet fee for the service provided e.g. administration costs. Depending on the umbrella company, this will either be a fixed fee (remains the same regardless of what you get paid each time) or a percentage fee (e.g. 5% of your take home pay). 

For more information on how we approach fees, drop us a message via email at [email protected]. 

How much holiday pay am I entitled to as a contractor working with an umbrella company? 

Most umbrella companies will provide you with a holiday entitlement of 28 days. Your holiday pay will be deducted every time you get paid and this will appear on each of your payslips. At Mint Umbrella, we give contractors the option to bank holiday pay, with the freedom to opt out at any time. 

How is my holiday pay calculated?

To work out how much holiday pay will be deducted from your payslip, you need to divide your statutory entitlement (5.6 weeks) by your total working weeks (46.4 weeks). This means that 12.07% of your gross taxable income will be deducted, banked and paid to you whenever you take time off.  

Can you switch from your umbrella provider mid-contract? 

Yes, you can switch from your existing umbrella company to a different one whenever you want and the process is very straightforward too. Simply inform your existing umbrella company, request a p45 and alert your recruitment agency about the switch.  

How do I choose an umbrella company? 

Although this is a completely personal decision, there are a few considerations to take into account when deciding which umbrella to work with:

1. Are they compliant with UK tax law? Check out our handy guide to spotting an umbrella tax avoidance scheme for more information. 
2. Check their payment and expenses policy.
3. Are they on a preferred supplier list?
4. Are their fees reasonable? 

The Mint Umbrella team is here if you have any further questions about working with an umbrella company or working with us specifically! Get in touch today via email at [email protected] or give us a call on 0203 967 6846.