What is an Umbrella Company?
Umbrella Company is a term commonly used to describe a Company which is usually a standard UK Limited Company that acts as a supplier or outsourced service provide, acting as the “employer” on behalf of contractors and it end clients.
The employee signs a contract between the Umbrella Company and recruitment agency or the end client on behalf of the Contractor who will be carrying out the task or assignment.
By doing so the Umbrella Company becomes the legal employer of the contractor or worker and invoices the end client for the services provided by its employee once a time sheet has been submitted. In doing so the Umbrella Company makes the deductions required in regards to Income Tax and National Insurance and arranges to pay the contractor their salary or wages.