Umbrella Companies have a unique place within the freelancer economy. In short, an Umbrella Company acts as a limited company on your behalf. So if you take a booking, it's the umbrella company that invoices YunoJuno/Client and they take care of the appropriate taxes so that whatever you receive is free from all tax obligations. You as a freelancer, are effectively an employee of the umbrella company, but only so you can have the appropriate regulations and paperwork is taken care of for you.
A common question is "If I work under an umbrella company structure, am I still a freelance ie. move from client to client, project to project?" The answer is yes. You continue to have the freedom you had as an independent professional but get all statutory rights and benefits such as holiday pay, maternity/paternity, sick leave and pensions. They will take the appropriate tax owing to HMRC as well as have the appropriate insurances against your bookings.
So which umbrella companies do we recommend?
Rather than name individual companies, we choose to recommend umbrella companies that sit within a regulatory body. That body being The Freelancer & Contractor Services Association (FCSA).
The FSCA works as an independent body to ensure that the accredited umbrella company members are fully compliant and transparent in their practices with all relevant authorities. There are currently 64 FCSA-accredited umbrella companies. The full list of current members can be found here.
The FCSA is the largest body of its kind in the United Kingdom and upon our own research, delivered the most comprehensive governance and auditing procedures to ensure any freelancer or end-hirer is protected in the supply chain relationship and all the appropriate regulatory obligations are both reviewed and met by HMRC.
For example, no FCSA Accredited Member is allowed to operate Offshore Schemes, Loan Schemes, Trusts, Managed Services Companies Schemes, Pay-day-by-Pay models, or similar.
AN IMPORTANT NOTE:
YUNOJUNO DOES NOT MAKE A PENNY IN REFERRING UMBRELLA COMPANIES OR THE FCSA. THIS IS NOT A REVENUE STREAM FOR US.
Our commitment to our freelancer community is that we will be transparent about all the viable options to freelancers and their hirers. The FCSA threshold is our benchmark to ensure that freelancers are adequately serviced and protected in terms of correct tax obligations and compliance.