Blog post written by Churchill Knight Umbrella
If you are new to umbrella companies, you will probably have many questions about the registration process and what you need to do to be paid correctly and on time. In this short article, the umbrella registration process is summarised, as well as the information you will need to share with your umbrella for them to become your employer and you an employee.
Requesting a take-home pay calculation
Many contractors and freelancers find temporary assignments via a recruitment agency. In this scenario, the agency will almost certainly have a Preferred Supplier List (PSL) – a list of preferred umbrella companies they recommend their candidates use for payroll. Assuming your agency is trustworthy, the PSL will contain umbrellas that take compliance extremely seriously, and you will be in safe hands. In fact, a growing number of agencies have developed PSLs that exclusively include FCSA accredited umbrella companies.
However, not all agencies have Preferred Supplier Lists, and some have outdated lists containing untrustworthy payroll providers. In this case, you will be required to conduct your own research. PSL or not – always carry out due diligence when assessing payroll providers and never feel pressured into registering with a company you’re not comfortable with.
When you have identified a few umbrella companies you would be interested in using, you may be interested in requesting a take-home pay illustration from each provider. A take home pay illustration is a tailored calculation that will show you your estimated pay retention if you were to be paid via that particular umbrella. Reviewing take-home pay calculations is a great way to gauge if an umbrella is compliant because you should be able to see the deductions they will apply to your pay.
Compliant umbrella companies will process your payroll identically – by adhering to HMRC’s Pay As You Earn tax system (PAYE). Therefore, the only thing that will impact your pay retention between umbrella companies is the margin they deduct for processing your payroll. For example, suppose you identify two umbrella companies you’re interested in joining, and they both have a £25 per week margin. In that case, you should expect to retain the same amount of your pay – to the penny.
Key Information Documents
Before you agree to register with an umbrella company, you should be issued a Key Information Document (KID) by your agency (but produced by the umbrella). Introduced in Regulation 13A of the Conduct Regulations, a Key Information Document is a summary of your payment terms when you use an umbrella company for a temporary assignment. In the document, there should be a clear breakdown of your pay, including the legal deductions made to your gross pay before the umbrella sends your net salary into your bank account.
If you don’t receive a Key Information Document, do not register with an umbrella and request one from your agency. Agencies often work closely with umbrella companies to ensure Key Information Documents are produced quickly and accurately. If you have sourced an assignment direct with the end-hirer, they should be able to assist you with Key Information Documents.
The initial registration process
For an umbrella company to legally become your employer for payroll purposes, you must provide several pieces of personal information. Therefore, compliant umbrella companies will have a registration process, often an online form, that will ask you for the following:
- Full name
- Date of birth
- Contact information
- National Insurance number
- Student loan status
- Bank information
- Agency information (if applicable)
- Assignment details
- Providing the correct paperwork and identification
As well as providing the information above, you will need to send the umbrella proof of your identity and right to work in the United Kingdom. Most commonly, contractors will send their chosen umbrella a copy of their passport – to prove identification. If you are required to provide proof of your right to work in the UK (because you are not a UK national), the umbrella will ask you to generate a share code via the governments online right to work checking service and send this to them along with your date of birth. If you have any questions about providing proof of your identification or right to work within the UK, speak with the umbrella, and they will be happy to help.
Contract of Employment and P45
Before officially becoming an umbrella employee, you will need to sign a Contract of Employment. Usually, the contract is a thick document consisting of 20+ pages, and you must read it thoroughly. Only sign and return it if you are entirely satisfied with its content, and do not hesitate to ask questions if you have any.
Your umbrella will also require you to provide them with an up-to-date P45 to ensure you are put on the correct tax code and pay the right tax and National Insurance Contributions. However, if you don’t have a P45 – don’t worry. You can complete a short government form online called the ‘Starter checklist for PAYE’.
Commonly referred to as the onboarding process, this is the period between completing the registration process and receiving your first payment via the umbrella company. During onboarding, you will have the opportunity to test the umbrella company’s portal, if they have one, and ask any questions about your payroll.
Submitting hours worked and being paid
To be paid accurately and on time, you may be required to submit timesheets to your umbrella company – to allow them to invoice your agency and receive your gross funds (before sending you your net salary). However, some recruitment agencies are ‘self-billing’, and this could make your life easier.
A self-billing arrangement is an agreement between the recruitment agency and umbrella where the agency sends the workers’ gross funds to the umbrella company on a specified date. Therefore, if you work through a self-billing agency, they will send your funds directly to the umbrella, and this should ensure payments are made to you accurately and on time (PAYE). Sometimes, you might be required to submit the hours you have worked to your agency. If you have questions, speak to the recruitment consultant who helped you source your temporary assignment.
If you are required to submit timesheets to your umbrella, many providers have easy-to-use online portals and mobile apps designed to make your life as straightforward as possible. Before registering with an umbrella company, you must know how your payments are processed – to avoid any delays and unpleasant surprises.
About Churchill Knight Umbrella
Churchill Knight Umbrella is an FSCA accredited umbrella company backed by professionals with over 20 years of industry experience. Churchill Knight Umbrella is one of the most recognised umbrella companies in the UK and appears on dozens of high-profile agency Preferred Supplier Lists. For a take-home pay calculation, please contact Churchill Knight Umbrella via their website.