STEP 5

Once the umbrella company receives payment from the agency, your umbrella will process your payroll and pay you a salary, following deductions for employment taxes, the pre-agreed umbrella fee/margin, personal taxes, and pension contributions (if applicable). Further advantages of using an umbrella include same-day set up and the provision of some statutory benefits such as sick pay and holiday pay and employment protection. This gives contractors a fast and efficient means of getting paid, with some employment security. However, possibly the most considerable benefit of contracting through an umbrella, and one that accounts for their rising popularity, is that using one entirely cancels out the risk posed by IR35.