What are the disadvantages of using an umbrella service?
This is the most expensive way of working in terms of tax and NI and you are reliant on the umbrella company to collect your money from the client or agent and then pay it on to you. Normally you will pay around £100 a month for an umbrella service. Also, new legislation will limit the financial benefits of using these companies. It used to be the case that freelancers could claim high levels of expenses through umbrella companies, but this benefit has gone. The new legislation stipulates that those working through umbrella companies need specific, accurate records for any expenses claimed. If you haven’t actually spent the money and have the receipts to prove it was wholly in connection with work, you simply will not be able to claim expenses.
