Glossary · Compliance
What is Umbrella company
Definition
A UK payroll intermediary that employs contractors and processes PAYE on their behalf, used widely for inside-IR35 assignments.
Applies to: UK · Reviewed by James Doyle
In practice
The agency contracts with the umbrella, the umbrella employs the worker, and statutory deductions run through the umbrella's payroll.
Agencies remain exposed to supply-chain risk if the umbrella operates a non-compliant scheme, so preferred-supplier lists and audits matter.
Related terms
IR35
UK off-payroll working rules that decide whether a contractor working through their own company should be taxed as an employee.
ReadPAYE
Pay As You Earn: the UK system for deducting income tax and National Insurance at source. The default for agency temps employed directly.
ReadWorker classification
Whether a worker is an employee or an independent contractor in law. Getting it wrong creates back taxes, penalties and client indemnity claims.
Read
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