HMRC have issued updated guidance for those individuals who work through umbrella companies. According to HMRC:
“This guidance has been updated to show how umbrella company workers are engaged. It has new sections to help workers understand their pay and employment rights and check that their tax and National Insurance is correct.”
HMRC summarise how an umbrella company works in the following terms:
“An umbrella company is a business often used by recruitment agencies to pay temporary workers.
In most cases, the umbrella company employs you and pays your wages through PAYE. It does not find temporary work for you, this is done by the recruitment agency (also known as an ‘employment business’).
Although the umbrella company is your employer and will pay you, the work you carry out will be for one of the recruitment agency’s clients. This work is often on a short-term basis.”
The guidance, which is written from the point of view of the employee rather than the employer, goes on to address the following further issues:
- What happens after you contact a new recruitment agency
- Your employment rights
- How you get paid
- Understanding how your gross pay is calculated
- Checking your payslip
- If your pay is not what you expected
- Get help with your pay and rights
Related content from Claritax Books
In Employment Status, author David Kirk guides the reader through the maze of apparently contradictory case law on this topic. The book includes coverage of IR35 issues, and also of topics of officers, agency workers, personal services companies and special occupations.