Umbrella Companies UK 2025 | FCSA Certified Contractor Umbrella Company Guide
Umbrella Companies UK 2025
Comprehensive guide to umbrella companies for UK contractors. FCSA certified options, how umbrella companies work, fees, IR35 compliance, and contractor payroll solutions explained.
Umbrella companies offer a convenient way to trade for many IT contractors. Some contractors either have no wish to, or are unable to, set up a limited company and in these instances umbrella companies are the main alternative.
Other contractors may just wish to contract in the short term, perhaps just a few months, which makes setting up a limited company unviable. Umbrella companies became increasingly popular after the IR35 legislation was introduced over ten years ago, and even more so since the IR35 reforms in 2021. For comprehensive information, explore our Umbrella Company Guides 2025 with 105+ articles covering everything you need to know.
Below is a list of other FCSA certified umbrella companies operating in the UK market. All providers listed maintain FCSA certification ensuring compliance with industry standards.
Advance
Azebra
Big Fish
Bishopsgate
Brookson One
Churchill Knight
Clarity
Danbro
Giant Pay
Parasol
Paystream
Umbrella.co.uk
Liquid Friday
Workwell
Frequently Asked Questions
An umbrella company is a company that contractors can choose to work through as an alternative to setting up their own limited company business. The umbrella company acts as their employer, and as the intermediary between the contractor and their recruitment agency or end client. They handle all the administration and payroll, so it means you don't have to deal with any of the administrative tasks or responsibilities that come with running a limited company like accounting and taxes. The umbrella company will invoice your agency or end client, get paid for the work that you do, and pay you through PAYE, deducting costs like national insurance contributions and tax.
Contractors may choose to work through an umbrella company for a number of reasons. They are beneficial for when you are first starting out as a contractor, as it is more straightforward than setting up and running a limited company, which can be a little confusing when you first set out. Similarly if you are only planning to contract for a short amount of time, an umbrella company is the simpler option; you don't want to go through the process of setting up a limited company only to have to dissolve it in the future. You might also choose to work through an umbrella company if you are working on a contract which is inside IR35, as the tax benefits of working through a limited company in this scenario can be reduced and the administration increased. You may even find that in some cases your recruitment agency or end client specify that they will only work with you through an umbrella company now due to IR35 reform.
When you work through an umbrella company, they become your employer and act as an intermediary between you and your recruitment agency or end client. The umbrella company invoices the agency or client for your work, receives payment, and then pays you through PAYE. They handle all payroll administration, deducting income tax and National Insurance contributions before paying you. This means you don't have to worry about accounting, tax returns, or other administrative tasks associated with running your own limited company.
The main benefits include simplified administration (no accounting or tax returns to worry about), quick and easy setup compared to forming a limited company, flexibility for short-term contracts, statutory benefits like holiday pay and sick pay, and compliance with IR35 when working inside IR35 contracts. Umbrella companies are particularly beneficial for contractors just starting out or those working on contracts that fall inside IR35.
It depends on your circumstances. If you're contracting short-term, just starting out, or working on contracts inside IR35, an umbrella company is often simpler and more appropriate. For outside IR35 contracts and long-term contracting, a limited company may offer better tax efficiency but comes with more administrative responsibilities. Consider your contract status, how long you plan to contract, and whether you want to handle the administration yourself.
Look for FCSA accreditation or membership, transparent fee structures, good customer reviews, comprehensive insurance cover, and excellent customer service. Avoid companies promising tax-free income or unusually high take-home pay, as these are often non-compliant schemes. Check out our trusted umbrella company directory to compare reputable providers.
No. While agencies can recommend umbrella companies and may have a preferred supplier list (PSL), they cannot legally force you to use a specific umbrella company. You have the right to choose your own umbrella provider. If an agency insists on a particular umbrella and won't accept alternatives, this could be a red flag for non-compliant arrangements or potential financial ties between the agency and umbrella.
IR35 is tax legislation designed to combat false self-employment. When working through an umbrella company, you're always paid through PAYE, which means you're automatically compliant with IR35 regardless of whether your contract falls inside or outside. This is one reason why many contractors choose umbrella companies for contracts that are determined to be inside IR35, as the tax treatment is the same but with less administration than operating a limited company inside IR35.
