Question 1

How much do umbrella companies charge?

Accepted Answer

Umbrella companies typically charge a fixed fee of £15-£30 per week (£780-£1,560 annually). Always compare the total cost including all fees and margins.

Question 2

What's the difference between contract rate and take-home pay through an umbrella?

Accepted Answer

From your contract rate, the umbrella company first deducts all employment costs (their margin, employer's NI, employer pension, apprenticeship levy). From the remaining gross pay, they then deduct your personal tax (PAYE), employee NI, and any other personal deductions to arrive at your net take-home pay.

Question 3

Is an umbrella company better than a limited company?

Accepted Answer

An umbrella company is simpler and required for most Inside IR35 contracts. It provides employment rights but typically results in lower take-home pay. A limited company offers more tax efficiency but requires significant administration and is only suitable for Outside IR35 contracts.

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