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Umbrella Guide

8 Step Guide to Using Umbrella PAYE


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  • HMRC IR35 Compliance 100%
  • Take home pay 80%
  • Contractor Satisfaction 100%
  • Increase of female contractors since 2011 24%
  • Employers planning to boost use of contractors 50%

Umbrella Company

Ontime’s Umbrella Company is the new solution for using sub-contractors within the construction industry or hiring any other staff the simple way. Our service is designed especially for those construction companies or agencies who presently engage their workers through CIS but might fall short of the strict criteria outlined by HMRC.

The CIS eligibility criteria above all scrutinies the relationship between the worker and engager, it is vital that the sub-contractor is free from day to day supervision for his/her work.

There are many other factors to be concerned about, if you are in doubt speak to Ontime for honest, impartial advice so we can establish exactly what is right for your company.

Umbrella Payroll Explained

Whether you work on an agency’s books or through an umbrella company such as Ontime, you will be an employee which means that your tax and national insurance contributions will be made through PAYE.

If you work through Ontime you will be engaged under a contract of employment and we will work under a business to business contract with the agency. The contract rate will be payable to Ontime  and we will deduct our margin from it and will fulfil our legal obligations by making payment to HMRC for Employer’s National Insurance.

The balance is your salary on which you will pay income tax and employee’s national insurance contributions. The contract rate agreed with the Ontime will be higher than the rate offered to you if you engage directly with the agency as they will be taking on employer responsibilities rather than the umbrella company.

With regard to expenses: if the client has agreed to reimburse certain costs then, whether you are paid direct by the agency or through Ontime , they will be paid to you in addition to your salary. If, however, the client will not be reimbursing any of your costs but they would be allowable as expenses according to HMRC rules then Ontime will process those costs with your salary and you will receive tax relief on them.

How an Umbrella Company works:

Umbrella company

Umbrella company

If you have never used an umbrella company before and are new to the whole concept, give us a call and we will explain things in detail.

Why Contractors will benefit from Budget 2015

Contractors will mainly benefit from the new measures outlined by Chancellor George Osborne in his 2015 Budget. The scrapping of self-assessment tax return, huge investment in infrastructure, tax concessions for oil/gas firms, more flexible and ISAs and tax cuts on savings should all benefit contractors.

Moreover, the planned tax relief rules on umbrella company expenses were not implemented. In their place is a new proposition where measures will be put in place to aimed at tackling those organisations who are abusing expense rules. But any new legislation will not be put into practice until 2016.

Simon McVicker, director of policy and external affairs notes “The Chancellor said his Budget backs the self-employed and announced a series of measures specifically designed to help independent professionals across the country”.

Although  the moves to cut “tax relief allowances” on lifetime pension savings & the impact of increasing the personal allowance will hit some contractors who earn between £100,000 and £122,000 with a 60% marginal tax rate were not pleasing. Some experts have also questioned the feasibility of abolishing tax returns.


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