Ever since the introduction of IR35 legislation by the UK government in year 2000, a lot of contractors have started to benefit from handling their payroll via umbrella service companies.

Oftentimes, contractors are put into a position where they become temporary employees of their clients under the terms of a contract. However, unlike regular employees, these contractors must handle the paperwork and tax returns all by themselves. Hence, to avoid all the hassle, umbrella services have become a viable option to many of them.

An umbrella company can help manage all the necessary paperwork, invoicing and administration of your payroll for a small amount of fee. Apart from handling your salary, the greatest advantage of using umbrella services is that they will keep your PAYE contributions compliant to the HMRC regulations.

Whether you are working freelance or as a contractor within construction you will need a contractor umbrella for PAYE services. Some of the umbrella companies also provide insurance cover to safeguard contractors from liability caused by the mistake of employers, the company itself, the HMRC or even the contractor themselves.

Since there is always a difference between each contract and contractor, the fee structure of using umbrella services is often made flexible. Contractors have the benefit of choosing either a variable weekly management fee or a fixed monthly rate, whichever fits their budget best.

Many of the established umbrella companies now will also offer a quick processing of all your income received, almost immediately. Instead of waiting for a set payroll date, the company will begin clearing money into your account as soon as possible.

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