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Updated on 6 April 2024

Finding a good umbrella company

Although there are problems with certain umbrella companies, others are compliant with the law. We outline how a compliant umbrella company should work in our factsheet for umbrella company workers. On this page, we are offering tips on how to find a safe, compliant umbrella company.

lots of black umberellas with one red one.
Farizun Amrod Saad /

Content on this page:


  • There is no single definition of an umbrella company. Anyone can set up a company and label itself an umbrella company. Some umbrella companies are not compliant with employment and tax law and the sector is currently unregulated. It is vital that you are on guard.
  • In particular, be aware that some agencies are incentivised by a commission into encouraging you to join certain umbrella companies. Do not go with an umbrella company just because it is on your agency’s ‘preferred supplier list’, or just because it has certain accreditations (more of this below under the heading Other checks) – you still need to do your research thoroughly.
  • Be clear on what rate your agency is quoting you to work through an umbrella – is it the PAYE rate (the rate they would pay you if you worked through them) or is it the ‘uplifted' rate (that is, the PAYE rate plus all the ‘on top’ employment costs the umbrella company will now have)? It should be the latter (uplifted rate).
  • Make sure your umbrella company is not a disguised remuneration scheme! As explained on our dedicated page, HMRC probably will not go after the umbrella company for unpaid tax; they will go after you.
  • Make sure you do not get caught up with problematic ‘mini’ umbrella companies or any of the other non-compliant arrangements set out on our dedicated page.
  • Check how the umbrella company will deal with your holiday pay – if it is not on a ‘rolled up’ basis, ask them to confirm the circumstances in which you may lose the holiday pay (for example, if you do not request it before the end of the holiday year). If you leave the umbrella company, ask them to confirm that all outstanding holiday pay will be paid to you with your final payment. If you don’t get any holiday pay at all, this is a warning sign that you could be in an elective deduction model – see our dedicated page for more information.
  • Do not get swayed by all the different ‘perks’ that may be advertised. Some of these may be worth very little, for example, same day bank transfers (which are pretty standard these days), or may not be relevant to you (for example, tailored mortgage deals). Some may carry an extra cost over and above the standard ‘margin’.
  • Similarly, do not get swayed by all the logos and badges that umbrella companies sometimes display on their website. They may not mean what you think – for example, some umbrella companies may be allowed to display logos that appear to ‘approve’ them after they have simply agreed to follow some principles. They may not have actually been checked or verified by the body and/or there may be no real policing of the use of the logo.

Involving your agency

As well as carefully checking things yourself, you might want to try and involve your agency. A good agency should be concerned to make sure that any umbrella companies they work with are meeting their legal obligations – not just because it protects workers but because it can protect them too.

Agencies have access to official government help and information (on GOV.UK) on how to do due diligence to assure their supply chain. HMRC have published guidance aimed at helping agencies that hand workers over to umbrella companies. This guidance will also help workers, as it shines a light on the different relationships and obligations that exist between agencies and umbrella companies. Understanding what you should look out for will inform you, protect you and ultimately help you to navigate through the world of umbrella company working.

There are even commercial tools in the marketplace available to agencies, that can read and audit umbrella company payslips. They then cross-reference the audit with the assignment rate (that is, the amount paid by the agency to the umbrella company) and the pay and tax information that has been sent to HMRC by the umbrella. The combination of these three steps means that they can identify when workers are being paid in a non-compliant way, but also other potential pay and tax skimming/abuses by umbrella companies. Some of these tools may also be available to workers directly.

There are of course other ways of agencies checking umbrella companies, but the key point is that agencies have a role to play here.

Other checks

Feel free to ask colleagues and friends for recommendations, but just be careful – some non- compliant umbrellas (particularly those that use disguised remuneration) pay large referral fees which may incentivise them to encourage others to join up. Just because they say something like ‘everyone is using it’ or that ‘it works and we take home more money’, does not mean it is legitimate. Also, don’t let the fact friends or colleagues seem to have been in non-compliant arrangements and nothing has happened (so far) sway you.

There are lots of net/take home pay calculators in the umbrella market. The resulting calculations may not be reliable so don’t rely on them to help you choose an umbrella. Many illustrations are based on assumptions that are not realistic/do not apply (for example, by automatically including expenses where there is no eligibility), probably with a view to appealing to those looking for higher 'take home pay’ returns and win business. Indeed, calculators can sometimes be incorporated into comparison websites that are shop fronts for disguised remuneration providers.

There are some official calculators you can use to work out what kind of take home pay you can ordinarily expect from a particular gross pay level on GOV.UK. We link to a free calculator that offers the assignment income to gross pay calculation element, so that you can see the bigger picture as to whether your money has been processed fairly and compliantly, on our factsheet.

There are some other basic checks you can do as part of your research before you sign up to work for a particular umbrella company.

You could check the umbrella’s website, find them on social media, look up other websites (sites like Trustpilot feature umbrella company profiles) and look for news and recent events about them.

If they are a limited company, you could check they are registered on Companies House, that their records look up to date and don’t look unusual in any way. More information is here.

You should check what insurances etc. they hold, for example, professional indemnity, employer liability, and public liability. Some may hold cyber security insurance.

You may ask – is there a public list of ‘good’/compliant umbrella companies who satisfy relevant criteria that I can use to help me choose? The short answer is no as umbrella companies are not currently regulated. However, in the absence of this, there are different ‘accreditation’ type bodies in the industry that set standards that umbrella companies should meet, for example Professional Passport or the Freelancer & Contractor Services Association (FCSA)Where an umbrella holds either accreditation it is a sign that the umbrella company has met the standards for that body.

However, umbrella companies do not have to join either of these bodies, it is a choice for each umbrella to make. There may be nothing wrong with an umbrella company that is not accredited. On the reverse, it is possible that even if an umbrella is accredited, you could still find problems (which should be reported to the relevant accreditation body).

That is why it is extremely important that you always do your own research into any umbrella company. 

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