Five Benefits of Working as an Umbrella Employee

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If you are new to the world of contracting, there are lots of different options to consider. One of those decisions is whether to work under an umbrella company or establish your own limited company. Using an umbrella company can suit the needs of many contractors, and there are lots of benefits to consider. Here at five of Parasol’s top picks:

Help with your finances

Working with an umbrella company means that you never have to fret about your National Insurance and taxes each month. All of your finances are managed on your behalf and taxes will automatically be deducted for you, so there will be no nasty surprises.

Working as an umbrella employee also means that IR35 will not be relevant to you. For many new contractors who are unsure of rules and legislation, this can be a great relief.

Employee benefits

When you work with an umbrella company, you will effectively be viewed as an employee and your wages will be paid through PAYE. This means that you will get all of the benefits of being an employee, with the freedoms of being a contractor, giving you the best of both worlds.

A recent survey conducted by The Freelancer & Contractor Services Association (FCSA) discovered that a staggering 76% of respondents (freelancers and contractors) currently do not have any method of providing sick pay, maternity/paternity leave, holiday or redundancy pay. One of the most important aspects of umbrella companies is the access to these benefits. Of the near-900 participants surveyed, their most important consideration was access to statutory sick pay. By joining Parasol, you will have access to these benefits, giving you an extra layer of security.

The simplicity of using an umbrella

Umbrella companies aim to make your business as easy to manage as possible. When you join, there’s no daily admin to agonise over – you can simply submit your timesheet each week via MyParasol and we’ll take care of the rest.

Your payslip will show a breakdown of the money you have earned and any deductions taken for tax. All of the deductions will be clearly displayed on your statement and likely will not differ greatly from month to month. Your wages will then be paid into your bank account. Knowing when and how much you are going to be paid is incredibly simple. This is the perfect option for busy contractors with little time to spare each day.

Claiming business expenses

As an umbrella employee, you can claim back expenses for travel, tools and equipment. Parasol will manage this on your behalf, which means you can enjoy more of your hard-earned money at the end of each month.

Claiming back your expenses is easy; you will just need to log them in MyParasol, and we’ll do the rest. You can find more information about business expenses by reading our handy guide.

Flexibility of work

Umbrella companies are ideal if you are looking to test the waters and want to know whether contracting will work for you. There are no financial demands from running your own limited company and there is little to no paperwork involved. This is also an ideal solution if you are working shorter contracts or are in between permanent work.

In addition, choosing to operate under an umbrella brings a lot of freedom. This means that you could review your business and opt to switch to a limited company with ease.

Help from Parasol

If you are considering making the leap into contracting, Parasol is here to help. Our dedicated team is always on hand to answer your questions and provide you with all of the advice you need.

For more information about contracting and the benefits of working with Parasol, simply call us on 0800 464 0519 or email