Before you sign up to a contractor umbrella service, there are a number of questions you should ask prospective scheme providers.
1. How much do they charge?
This will typically be a weekly or monthly fee. You also need to know if there are any ‘hidden extras’ such as joining or leaving fees. Read our article on contractor umbrella fees.
2. What is the payment cycle?
Does the umbrella pay on receipt of a timesheet, or are there fixed payment dates? Does the company charge you even when you’re not “in contract”?
3. Speed of payment
Will the company pay your salary via same-day payment (Faster Payments or CHAPS), or only via BACS (which can take 3 to 4 working days to hit your account)?
Find out more about CHAPS, BACS and Faster Payments in our dedicated article.
4. How long has the scheme been up and running?
Is the umbrella scheme long-established, and how many contractor clients does the scheme currently have on its books (ask for current numbers, not ‘all-time’ numbers).
5. Are there any service level guarantees?
Some umbrella providers promise to return your fee if you are not satisfied, or if emails/phone calls are not responded to in a timely manner.
6. Do you have your own account manager?
Some scheme providers will provide you with a named account manager. It is always preferable to have a single point of contact.
7. Is business insurance included in your fee?
You will typically be covered for public and employers’ liability insurance. If it is provided, does your professional indemnity insurance cover element specifically include your job type?
8. How are business expenses treated?
You need to ensure you join a reputable scheme – if you are told that you can “boost your income via claiming back expenses”, you should read this article on expenses dispensations. You can only claim tax relief for expenses you have genuinely incurred on contract duty.
9. Are there any other benefits?
Some umbrella companies offer a range of extra benefits, such as a contributory pension scheme, discounts on healthcare, and free legal advice.
10. How is the scheme administered?
Can you submit your paperwork online? Can you view your account online? Some companies even send you an SMS when you have been paid. Read our guide to how a typical umbrella company operates.
A good place to start is our own contractor umbrella company directory.