Is your umbrella company compliant?


Everyone is responsible for their own taxes, even when the services of an umbrella company or an accountant are employed. Therefore, knowing whether an umbrella company is compliant or not is very important. This article discusses factors that you may want to consider when choosing a company and why it is important to get it right.


What to look for

Below you’ll find a list of signs that indicate an umbrella company may be compliant:


Have appropriate insurance to protect employees from work-related compensation and legal costs.

Employee benefits

Umbrella companies provide sick pay, maternity and paternity leave.


The company will sign employment contracts with you containing mutual obligations concerning working hours, notice periods and more.


The company will report all the taxes it has collected to HMRC regularly.

Fixed fee structures

Look for companies that charge you a fixed price for their services.

Below you’ll find the signs that indicate that an umbrella company may not be fully compliant:

Promise high take home percentages

Some companies claim to return a 90% take home amount which hints that they may be running tax avoidance schemes.


“IR35 compliant” is sometimes used as a marketing tagline in an attempt to appear legitimate, however this legislation has no effect on contractors who work through PAYE umbrella companies.

Hidden costs

Some umbrella companies charge contractors a sign on fee and exit fee.


Contractors are allowed to leave an umbrella company on their own terms at any time, however some (illegitimately) ask contractors for a notice period tying you to them beyond the point you want to leave. Often this leads to incurring costs for longer.