The umbrella is a limited company in its own right andusually employs from hundreds up to thousands of contractors. Rather than thecontractor's own limited company contracting with an agency or client, thelegal relationship is between the umbrella company and the agency or client.The umbrella invoices the client or agency, collects payment and then pays thecontractor net of the umbrella company's fees, which can be anything upwards of?0 per week for each contractor.?
Umbrella companies - how they work:?

Contractors find using an umbrella company simple. Once thecontractor has signed up, which can often be done online and over thetelephone, and negotiated their contract with the agency or client, they handover responsibility to the umbrella company's management team.?/p>The umbrella company will get the contract paperwork signedby both parties, so the contractor can start work secure in the knowledge acontract is in place. Then each week, or month, the contractor completes atimesheet for the client to authorize before forwarding it to the umbrellacompany online, by fax or post.?
The contractor umbrella company will invoice the agency orclient for the correct amount, chasing for payment if necessary. Once theumbrella company has been paid, it will pay the contractor a salary net of theumbrella company fees, income tax and National Insurance Contributions, whichthe umbrella company pays direct to HMRC. Because the contractor can claimtravel and subsistence expenses, they pay less tax and take home more of theirgross fees.?
Thus, contractor umbrellacompanies are a popular trading solution for many contractors
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