What is a Contractor Umbrella Company

contractor umbrella company
contractor umbrella company

Contractor Umbrella Company

A Contractor Umbrella Company is a device where a contractor who is otherwise caught by IR35 tax can still claim some expenses against his or her income.

Typically the contractor would be employed by the Contractor Umbrella Company and would pay PAYE tax.

However, the contractor would be able to claim some expenses as long as he or she has receipts.

It is a halfway house between being an employee of a client company and being a small businesses in one‘s own account.


The Contractor Umbrella Company handles all the paperwork and all the admin.

Normally a contractor would fill in a time sheet and have it processed by the Umbrella Company. They would then invoice the agency or client.

The contractor would also supply expenses receipts to the umbrella company.

The contractor umbrella company typically supplies a complete payroll service to the contractor paying his or her taxes and National Insurance contributions.


The contractor umbrella company charges the contractor a monthly fee for their services.

They supply a varying degree of services for this charge.

Some pay the contractor as soon as they have received the timesheet while others will pay periodically. Yet others will pay when they receive the money from the agency or client.

So, for an analysis of different Umbrella Companies see our Which Umbrella Company? guide and our Directory of Umbrella Companies

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Public Sector Umbrella Company

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Have a look at our Contractor Job Search section.