IT Umbrella Companies
IT Umbrella Companies offer a solution for IT Contractors who are caught by IR35 – or even for contractors who don’t want the hassle of running their own Limited Companies. Most brollies are started by people who are in the Accountancy side of things but there the occasional ones like Parasol which was founded by two IT Contractors after they heard about IR35. IT Umbrella Companies allow contractors to claim a certain amount in expenses and they handle all the paper and admin for them. All contractors usually have to do is to fill in a timesheet online and type in details of their expenses and the rest is done for them. The Companies will invoice for them, deduct taxes and pay them – and the contractor can concentrate on what he or she does best, i.e. contracting.
IT Umbrella Companies sprang up after the advent of IR35 when it was decided that many contractors were just disguised employees. Companies had been laying off employees on the Friday and hiring them again as contractors on the Monday. This saved the company money and gave them a more flexible workforce. It was advantageous to the workers as they saved on tax and NICs and paid themselves dividends instead. However, the Government’s legislation caught far more than those contractors in its net and many contractors who were not disguised employees were caught in it. Brollies sprang up because of this. Many of the ‘disguised employees’ who were now caught by IR35 went into them. Also, they attracted those contractors who were not disguised employees but were now caught by the IR35 legislation. There are now over 200,000 contractors in brollies compared to virtually zero before 1999.
For a selection of good Umbrella Companies check out Which Umbrella Company