What is Umbrella Payroll?

Genius Money is not an Umbrella Payroll Company


Genius Money does not offer Umbrella Payroll Services.
We strongly believe that the process is unethical.

What is an Umbrella Payroll Company?

An umbrella company is a business that acts as a third party between a contractor and an employee.
The contractor outsources its payroll functions to the umbrella company, which handles the pay of the employee and makes any necessary tax deductions.

The use of umbrella companies is completely legal. However, a spokesperson for Her Majesty's Revenue and Customs (HMRC) said: "It is illegal for workers to pay the national insurance contributions of employers and HMRC cracks down on any abuse of PAYE rules.".

Umbrella payments are very likely to be tax avoidance and is extremely high risk!
You or your workforce could end up paying far more than just the tax owed back to HMRC.

What these Tax Avoidance Schemes look like.

All of these schemes have one thing in common and that is to attempt to disguise the true level of your earnings, which would ordinarily be subject to Income Tax and National Insurance contributions.

If your workforce are asked to sign documents other than your contract of employment, you should think very carefully before engaging with a company like this. You should consider challenging the company if your workforce are asked to sign separate agreements to receive loans, advances, shares, annuities or anything else not relevant to their work.

Steps to protect yourself

Avoid umbrella companies or recruitment agencies that promise an 80%, 90% or 95% take home of wages. This is unlikely to be tax compliant; the basic rate of tax is 20%, not forgetting that National Insurance contributions must also be paid.

Check if wages/payments are being paid through payroll and are subject to PAYE deductions. If not, then this indicates that tax is only partly being paid on income.

Ensure payments are not being made using loans, credit or investment payments. Many non-compliant companies will claim this isn't subject to income tax or National Insurance, this is not true and is considered tax avoidance.

Make sure that payment from umbrella companies are not routed through various other companies before it is paid.

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