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  • Publish Date: Posted about 2 years ago
  • Author: Steve Twinley

​What does an umbrella company do? We are often asked a lot of questions such as:


  • What services do umbrella companies offer?

  • Why do they exist?

  • Why may working through an umbrella may be the only option for an inside-IR35 contract?

  • Do Next Phase recommend any particular umbrellas?


In summary, an umbrella company acts as your employer for the duration of your contract assignment. For a fee (which varies but is typically between £50 and £90 per month), the umbrella will process your monthly / weekly payments, deduct the correct statutory payments of tax and national insurance, oversee your holiday pay and ensure that you are fully insured for the work you are performing.


A good umbrella will enable you to enter your hours online / via an app, and will give you up-to-the-minute transparency on your payments accrued. They can usually provide guidance and advice on your tax code, as well as investment in a pension scheme or employee benefits.


Since the IR35 laws changed last year, making the private sector mirror the public sector, the number of people using umbrellas has increased significantly. It is much rarer nowadays to have an ‘outside-IR35’ contract where you can still work through your own limited company.


It is therefore important to understand what you should expect from an umbrella, so you can choose the right one.

We don’t recommend one single umbrella, but we do have an approved supplier list which you can download from our Next Phase website. Everyone we partner with is approved by the FCSA and APSCo.


Fun fact: Today (Thursday 10th February 2022) is apparently “National Umbrella Day” – not necessarily about umbrella companies, but it fits with today’s theme!