Frequently Asked Questions

Questions most commonly asked by our contractors

Contractor Questions

If I work as a contractor, who is my employer?

If you choose to work as a contractor and opt for an umbrella company service, then the umbrella company becomes your employer. Your umbrella company will provide you with a contract of employment, manage your payments, and ensure that you receive statutory entitlements and employee rights.

How frequently will an umbrella company issue payment to me?

As a contractor operating through an umbrella company, your payment schedule aligns with the arrangement you have established with your recruitment agency. 

What deductions will be taken from my earnings by the umbrella company?

Umbrella company employees receive payments as permanent employees (PAYE). Consequently, your umbrella company will deduct taxes and Employee National Insurance Contributions from your earnings, forwarding them to HMRC. As an umbrella employee, you will also bear employment expenses, such as the Apprenticeship Levy and Employer’s National Contributions. Your payslip will reflect additional deductions, including Holiday Pay (which merely reallocates your pay without affecting your net income), student loan repayments (if applicable), and pension contributions (if you choose to participate in our designated pension scheme).

What insurance options are provided?

Most umbrella companies offer coverage, including Employers’ Liability Insurance, Public Liability Insurance, and Professional Indemnity Insurance for their employees. These should be part of your agreement with the umbrella company and should not incur any additional charges.

How is my pension handled with an umbrella company?

Umbrella companies are mandated by law to automatically enrol you into their designated pension scheme and at MyPeople that happens after a three-month period. Nonetheless, you have the full right to opt-out immediately upon enrolment. By opting out promptly, you should be eligible to reclaim your initial contribution. For further details, consult your umbrella company

Is it possible to use an umbrella company while also having a limited company?

Yes, you can use an umbrella company concurrently with maintaining a limited company. However, during the period of using an umbrella company, your limited company will become inactive, and no payments can be processed through it for the same assignment.

Do I pay taxes as a contractor?

The earnings you generate as a contractor, whether through Umbrella or the CIS scheme, are subject to taxation. Your tax obligations vary depending on your employment classification. At MyPeople, we’re dedicated to clarifying the optimal approach for your situation and guiding you through your tax liabilities.


Why should I use a UK based umbrella company?

Using a UK-based and compliant umbrella service for your payroll is highly recommended. If HMRC discovers that you’re utilizing an offshore intermediary promoting tax avoidance schemes, you may face substantial penalties and be obligated to repay any outstanding taxes they deem you owe.


What's the difference between umbrella and PAYE?

Under both pay models, you will get taxed under PAYE. The difference is an umbrella company will be your only employer whether you’re on a contract or not. That continuity of employment will help when applying for a mortgage or credit. Whereas, with agency PAYE, each new contract is a different run of employment.

MyPeople Calculator

Take Home Pay Calculator

Our user-friendly calculator takes the guesswork out of your take-home pay. Simply input your gross earnings, and our calculator will provide a detailed breakdown of your pay, taxes, and deductions.