Umbrella company (UK)

UK contractors who do not want to run their own limited company often work through an umbrella company. The umbrella acts as the employer: the end client pays the umbrella, the umbrella deducts employer National Insurance and its own margin, then pays the contractor as an employee with PAYE tax and employee NI deducted. This is simpler than running a limited company but typically nets the contractor 10 to 15 percent less than operating through their own personal service company. Some umbrella arrangements have been linked to tax avoidance schemes — always use HMRC-compliant providers and check they are registered with the FCSA or Professional Passport. Umbrella employment is generally inside IR35 by default.