Knowledge Hub > Frequently Asked Questions Frequently Asked Questions Search for: Umbrella CIS PEO For Contractors What is an umbrella company, and how does it work? An umbrella company is a business that hires employees working on temporary assignments, usually through a recruitment agency. It acts as an intermediary between the employee and the end client, taking care of all administrative duties like payroll, National Insurance and tax compliance. The umbrella company signs an employment contract with the employee which outlines the terms of employments such as salary, statutory entitlements, holiday pay etc. The contractor will receive a payslip showing gross pay, deductions and net pay. What documents do I need to provide? All employees must provide proof of right to work, proof of address dated within the last 3 months, their National Insurance number, bank details, and their P45 or P60 from previous employment. If you are a British national, you will need to provide the following: A copy of your British passport or; A copy of your birth certificate with proof of NI number and photo ID such as driving license. If you are not a British national, you will need to provide the following: Photo ID such as passport or identity card A valid share code (If you don’t have the above, we will require any documentation which supports your visa so that we can run a right to work check.) How do I get paid? Once payment terms are agreed with your agency or end client, we will reflect these terms in your assignment schedule. Payments are typically made weekly or monthly. You will need to follow the client’s process for submitting timesheets. Once we receive your hours worked, we will invoice the recruitment company or end client. Upon receipt of payment, we will process the payroll, making all necessary deductions for taxes (PAYE), National Insurance contributions, and other relevant deductions before paying you. You will receive a text message notifying you of the payment, and you can log into our portal to view your payslips and other financial documents. Am I entitled to sick pay and holiday pay? As an umbrella employee, you are entitled to sick pay and holiday pay, similar to other types of employment. You must earn at least the Lower Earnings Limit to be entitled to this and be sick for the qualifying ‘period of incapacity for work’ (4 or more days in a row including non-working days and public holidays). You must ensure that you have informed us and provided evidence (fit note from your doctor) if sick for more than 7 days. If you qualify for SSP this will be calculated and paid out to you as per your usual payment schedule. In line with statutory entitlements, your holiday pay is based on the hours or days you work. In the UK, the statutory minimum is 5.6 weeks per year calculated at 12.07% of pay if you are in full-time employment, including bank holidays. Holiday pay is typically included in your pay rate and is either paid out each time you are paid or reserved by the Umbrella Company and paid out when you take time off. Other statutory payments you may be entitled to as an Umbrella Company employee are: Statutory Maternity Pay (SMP) Statutory Paternity Pay (SPP) Statutory Adoption Pay (SAP) How do you charge for your service? Like all compliant and FCSA accredited Umbrella Companies, we retain what is known as an umbrella margin. This margin is the amount the umbrella company retains when funds are received from an employment agency or end client for the work you undertake. This margin will be retained as per your payment schedule i.e. weekly for monthly for each period you have worked. During your registration process you will be provided with a Pay Illustration explaining all elements of your pay, you will also be provided with a Key Information Document, otherwise known as a KID. The umbrella Key Information Document (KID) will give clear and essential details about employment terms, payment processes, and associated costs when a contractor is engaged through an Umbrella Company. Will IR35 be an issue? No, IR35 is not an issue if you are an umbrella employee. IR35 legislation is designed to determine the employment status of contractors working through intermediaries, such as personal service companies (PSCs) or Ltd companies, to ensure tax compliance. As an employee, your tax and National Insurance contributions are deducted at source through PAYE, so IR35 does not apply to you since you are already taxed as an employee. We will ensure all legal requirements are met. Can I work for multiple agencies at the same time? Yes, the contract of employment is what is known as an ‘overarching agreement’. This means that you can be engaged on multiple assignments under one contract of employment. It is important you let us know how many assignments you are working on so that we can ensure total compliance during your employment with us. Will I be insured? Yes, you will be covered via our professional indemnity, public liability, employer's liability and personal accident cover insurance. Details of which will be provided to you during the registration process. Will I have access to a pension scheme? Yes, all compliant Umbrella Companies should adhere to the Auto Enrolment scheme. The umbrella company will automatically enrol eligible employees into a qualifying workplace pension scheme (we use NEST) and contribute to it on their behalf. This ensures employees have access to a pension plan and encourages retirement savings. Should saving for your pension not suit you right now, you will have the option to opt-out. Will I be considered self-employed or an employee? When you work through an Umbrella Company, you are regarded as an employee of that company according to tax and employment laws. This arrangement offers specific advantages and legal protections that self-employed individuals are not entitled to. What is the construction industry scheme (CIS)? CIS is a UK tax scheme which makes deductions as you are paid, that count as advance payments for your tax and National Insurance liabilities. Construction industry subcontractors will need to register for CIS by calling 0300 200 3210. How do I register CIS? Subcontractors in the construction industry will need to register for the CIS by calling their helpline on 0300 200 3210. Subcontractors must also be registered as self-employed which can be completed online. I am a limited company. Does CIS apply to me? It is important to remember that CIS can be applied to subcontractors and also Limited Company contractors offering services within the construction industry. What national insurance do I need to pay? You will pay class 2 National Insurance which is £3.15 a week if you earn more than £6,725 a year. You will also pay 10.25% on profits between £11,908 and £50,270 and 3.25% on profits over £50,270. Am I entitled to holiday pay? Only workers and employees are entitled to holiday pay. As a self-employed subcontractor, you are not entitled to holiday pay. You will need to manage your finances and have a provision set aside for when you do take time off work, or if there are times that you do not have work available.. Are expenses subject to CIS? Expenses that you are being reimbursed by Stonebridge and/or our clients will be subject to CIS tax, unless they are for materials or hired equipment and a receipt is provided. Do I need to invoice Stonebridge? You do not need to raise invoices to Stonebridge. We operate an online self-billing system. Once your registration has been processed you will receive a welcome email with your login details for our online portal. There, your remittance advices will be available to view and print. At the end of the tax year your year-end statement will also be available online shortly after year-end. What happens if I have an accident at work? Whilst engaged with Stonebridge, you will be covered by our group Personal Accident Insurance policy. This policy is provided FREE of charge and will provide you with the comfort that should you need to claim, you will be able to benefit from up to £300 per week tax-free if you are left unable to work or £75,000 tax-free for loss of life. How can I apply for gross payment status? To qualify for gross payment status, you must show HMRC that your business passes some tests. You’ll need to show that: you’ve paid your tax and National Insurance on time in the past your business does construction work (or provides labour for it) in the UK your business is run through a bank account HMRC will then look at your turnover for the last 12 months. Ignoring VAT and the cost of materials, your turnover must be at least: £30,000 if you’re a sole trader £30,000 for each partner in a partnership, or at least £100,000 for the whole partnership £30,000 for each director of a Limited Company (or at least £100,000 for the whole company) What is PEO? A PEO, or Professional Employer Organisation, acts as a co-employer for your business, handling various HR and administrative tasks like payroll processing, benefits administration, and compliance. This frees you, the business owner, to focus on core business activities. Will I be responsible for my own tax if getting paid via a PEO? No. While a PEO becomes the employer of record for tax purposes, they are responsible for paying all your taxes, including income tax and National Insurance contributions. You will receive a payslip reflecting your net pay after all deductions and taxes are handled by the PEO. How does PEO work? When you partner with a PEO, you enter into a co-employment agreement. The PEO assumes responsibility for tasks like: Payroll processing: The PEO processes payroll, manages deductions, and ensures timely payments for your employees. Benefits administration: The PEO can help you set up and manage employee benefits packages, including health insurance, retirement plans, and more. Compliance: The PEO ensures you comply with various employment laws and regulations, including tax filing and reporting. What are the benefits of PEO? The benefits of using a Professional Employer Organization (PEO) include access to comprehensive HR services, such as payroll administration, employee benefits management, and risk mitigation. PEOs also offer expertise in compliance matters, allowing businesses to focus on core operations while reducing administrative burdens and enhancing employee satisfaction. Additionally, PEOs can provide cost savings through economies of scale and improved efficiency.employee benefits than smaller businesses might be able to obtain on their own. Do I get access to statutory benefits if I am getting paid via a PEO? Yes, you will still be entitled to statutory benefits, such as Statutory Maternity Pay, Statutory Sick Pay, and Statutory Redundancy Pay, even if you are paid through a PEO. These are employer-funded benefits, and the PEO is legally obligated to provide them as your employer of record. Can I work via a PEO if my role is inside IR35? Whether you can work through a PEO as a contractor within IR35 depends on several factors, including the specific terms of your contract and the nature of your work. It's crucial to consult with a tax advisor or the PEO themselves to determine if your specific situation allows for PEO engagement within IR35 regulations. What is PEO? An umbrella company employs individuals that work on assignments with different clients. The work an umbrella employee does is usually sourced by a recruitment agency, who have a business relationship/partnership? with the umbrella company. The umbrella company will be responsible for invoicing the recruitment agency for completed work, calculating and paying PAYE (Pay as You Earn) and National Insurance and providing statutory benefits to its employees. What is an umbrella company? An umbrella company employs individuals that work on assignments with different clients. The work an umbrella employee does is usually sourced by a recruitment agency, who have a business relationship/partnership? with the umbrella company. The umbrella company will be responsible for invoicing the recruitment agency for completed work, calculating and paying PAYE (Pay as You Earn) and National Insurance and providing statutory benefits to its employees. How much tax do I pay? The amount of tax you pay will be dependent on factors including your tax code, your year to date earnings and your sources of income. For a summary of deductions for your personal circumstances, please email us at [email protected]. Why am I on the wrong tax code? Please send us your P45 to ensure that you are on the correct tax code for your employment. If you believe your tax code to be incorrect, our payroll department will advise you to contact HMRC. Unfortunately, we are not able to discuss this with HMRC on your behalf. Do I get holiday pay? You will receive holiday pay which is calculated at 12.07% of your gross earnings. This can be accrued by Stonebridge for each period that you are paid, then paid out to you upon request or paid each week with your wages. What insurance am I covered by? As an employee of Stonebridge you will be covered by our Employers Liability, Public Liability and Professional Indemnity insurances. For more information on these insurances, please email [email protected]. - Is this the correct email address? What other statutory benefits am I entitled to? You are entitled to claim statutory sick pay, statutory maternity, paternity and adoption pay. To claim sick pay, we will need to see a doctor’s certificate, at which point we can check if you meet the qualifying criteria. In order to claim maternity pay, we will require a MAT B1 maternity certificate and a letter informing us of your due date. What is the apprenticeship levy? From April 2017 some employers will be required to contribute to a new apprenticeship levy to help fund apprenticeship training. The levy is calculated as 0.5% of all earnings subject to Class 1 secondary (Employers) National Insurances contributions. It will be deducted from the gross amount we receive from your agency, before we process your payment. Why is employers national insurance deducted from my pay? Your umbrella company will invoice your agency for the work you have undertaken. At this point, the funds belongs to the umbrella company, as your employer. Employer deductions such as employers National Insurance, pension contributions and the company margin will then be deducted. The amount remaining will be your gross income and the amount which your tax and National Insurance contributions will be calculated on. The assignment rate offered to you by your agency will have been increased compared to a direct PAYE rate to accommodate these deductions. Do I get opted into a pension scheme? We will send you a text message once we have processed your pay which will indicate when you are being paid. You will also receive a payslip via email which will detail your gross earnings and a breakdown of your deductions. This will then be uploaded onto your online portal for you to view at your convenience. How do I know I have been paid? We will send you a text message once we have processed your pay which will indicate when you are being paid. You will also receive a payslip via email which will detail your gross earnings and a breakdown of your deductions. This will then be uploaded onto your online portal for you to view at your convenience.