Umbrella

What is an umbrella company?

Umbrella companies are businesses that employ agency and temporary workers as their own employees under a contract of employment. These workers, often called ‘contractors’, typically receive a continuous employment contract, meaning their employment continues even between assignments. To meet continuous employment criteria, umbrella companies may guarantee a minimum number of paid hours per year (for example, 336 hours at minimum wage in the UK).

Why have I been told to use an umbrella company?

Historically, if you found work through an agency, the agency would usually handle your pay directly. Nowadays, however, many agencies prefer not to manage payroll themselves, as outsourcing this task saves them time and money and allows them to focus on matching workers with available jobs. As a result, agencies often suggest that workers use an umbrella company.

It’s not illegal for agencies to do this, but when they refer you to an umbrella company, they should ensure they pass on enough funds to cover all employment costs the umbrella company will incur on your behalf. This includes the umbrella company’s margin (which we’ll cover later).

Once the umbrella company becomes your employer, it takes over responsibility for your pay and other employer obligations. This means the umbrella company will pay your wages, deduct tax and National Insurance contributions (NICs) as required under the Pay As You Earn (PAYE) system, and provide statutory employment rights.

How does an umbrella company work?

This is probably best explained by way of a diagram:

What are my employment rights if I use an umbrella company?

As an employee of the umbrella company, you have the same rights as any other employee. These include:

The right to be paid at least the minimum wage
The right to paid holiday
The right to be auto-enrolled into a pension (if you meet the relevant criteria)
Access to statutory benefits such as sick pay and maternity/paternity pay (provided you meet the relevant criteria)

Visit the GOV.UK website for detailed guidance on employee rights.

It’s important to note that, as an agency worker, you would get the main employment rights even if you do not work through an umbrella company. However, working through an umbrella company can offer additional benefits. For example, having a continuous contract of employment can provide a payroll link from one assignment to the next, which helps prevent issues such as being put on ‘emergency’ tax when starting a new assignment with a new agency. Some umbrella companies also offer extra perks, such as shopping discounts and online portals to help you track your pay.

How will my holiday pay be calculated?

Full-time workers in the UK are entitled to a minimum of 28 days’ paid leave per year, including bank holidays (5.6 weeks). You may be entitled to more under the Agency Workers Regulations, depending on your assignment.

If you work irregular hours, your holiday entitlement is usually calculated as a percentage of your hours worked or your earnings. The standard calculation for most umbrella employees is 12.07% of your gross pay. This percentage is based on the statutory entitlement of 5.6 weeks’ holiday out of a 46.4-week working year (52 weeks minus 5.6 weeks of holiday).

For those working in education or on term-time contracts, a higher percentage may apply. For example, if you work only during the 39-week school year, your holiday entitlement could be calculated at 14.36% to reflect the shorter working year.

You can choose to have your holiday pay advanced in each payslip (rolled-up holiday pay) or accrued and paid when you take time off.

Your payslip and reconciliation statement will clearly show how your holiday pay is calculated and paid.

How will my pay be calculated?

The recruitment agency or client pays the umbrella company the assignment income for the work you have completed. This amount is higher than your actual gross pay, as it includes the costs of employment.

From the assignment income, the umbrella company deducts the following employment costs:

Employer’s National Insurance contributions
Employer’s pension contributions (if applicable)
Holiday pay (either advanced to you in each payslip or accrued for later use)
The Apprenticeship Levy (if applicable)
The umbrella company’s margin (the charge for providing payroll and employment services)

The remaining amount after these deductions is your gross pay.

From your gross pay, standard employee deductions are made, including:

Employer’s NationIncome Tax (PAYE)al Insurance contributions
Employee’s National Insurance contributions
Employee pension contributions (if applicable)
Student Loan repayments or other agreed deductions (if applicable)

The amount left after these deductions is your net pay (take-home pay), which is paid directly into your bank account.

You will receive a payslip and a reconciliation statement showing a full breakdown of all deductions, so you can clearly see how your pay has been calculated.

How do I opt out of the Jarvis Pension scheme?

To opt out of contributions, employees must submit an opt-out request through the Jarvis app or email customer support at support@pensionjar.com

Once they receive this request, they will notify Odyssey to take action accordingly.

What insurances do you provide?

As an employee of Odyssey, you are covered by our insurance for your complete peace of mind.

You are covered for Public Liability, Employers' Liability and Professional Indemnity as standard.

What should I do if I’m paying too much tax or my tax code is wrong?

If you believe you’re paying too much tax, it could be because your tax code is incorrect or HMRC doesn’t have the latest information about your employment.

You can check your current tax code on your payslip. If it doesn’t look right, contact HMRC directly on 0300 200 3300 or check/update your details through your Personal Tax Account on GOV.UK.

HMRC will update your tax code if needed and send it to us automatically, so your future payslips reflect the correct tax.

How do I claim a tax rebate for overpaid tax?

If you’ve overpaid tax, HMRC may issue a refund automatically once they review your records.

You can also claim a rebate yourself through your Personal Tax Account or by completing form R38 on GOV.UK.

CIS

What is the Construction Industry Scheme (CIS)?

The Construction Industry Scheme (CIS) is an HMRC scheme that applies if you work for a contractor in the construction industry but not as an employee, for example, as a self-employed individual. Under CIS, contractors deduct tax from payments to subcontractors, which serves as an advance payment towards their tax and National Insurance.

What types of work are covered by the scheme?

CIS covers most construction work to:
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A permanent or temporary building or structure.
Civil engineering work, like roads and bridges.

For the purpose of CIS, construction work includes:
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Preparing the site - for example, laying foundations and providing access works.
Demolition and dismantling.
Building work.
Alterations, repairs and decorating.
Installing systems for heating, lighting, power, water and ventilation.
Cleaning the inside of buildings after construction work.

Deductions

Under the Construction Industry Scheme (CIS), contractors are required to deduct money from payments made to subcontractors and pass these deductions to HM Revenue & Customs (HMRC). The amounts deducted count as advance payments towards the subcontractor’s tax and National Insurance contributions.

There are three possible deduction rates:
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Standard rate (20%): Applied to payments made to subcontractors who are registered with HMRC for CIS.
Higher rate (30%): Applied if the subcontractor is not registered with HMRC or cannot be verified.
Gross payment status (0%): No deductions are made if the subcontractor has been granted gross payment status by HMRC; they receive full payment and are responsible for their own tax and National Insurance.

Subcontractors applying to be paid gross

Subcontractors can apply to be paid gross under the Construction Industry Scheme (CIS), meaning no tax deductions will be taken from their payments. To qualify for gross payment status, you must meet certain HMRC criteria, including demonstrating compliance with tax obligations and business requirements.

If you wish to apply, you will need to provide evidence that you meet these qualifying conditions.

For more information on the application process and eligibility, please see:

HMRC’s guidance on applying for gross payment status

Can I be paid CIS under my limited company’s UTR?

Yes, if you are operating as a limited company subcontractor, you can register the company for CIS using the company UTR.

Payments will be made to the company, not to you personally.

However, you cannot mix your personal and company UTRs:

If work is performed as a sole trader, payments must be made using your personal UTR.

If work is performed through a limited company, payments must use the company’s UTR.

How to register and more information

Register as a Sole Trader

If you already have a Unique Taxpayer Reference (UTR): CIS: How to register
You can register for CIS online using your Government Gateway user ID and password. If you don’t have a user ID, you can create one during registration. You can also apply for gross payment status at the same time.
If you do not have a UTR: register as a new business for Self-Assessment
Register as a new business for Self-Assessment and select ‘working as a subcontractor’ when prompted. This will register you for both Self-Assessment and CIS.

Register as a Limited Company or Partnership

Limited Companies:
Complete the online form for limited companies
Partnerships:
Complete the online form for partnerships
‍HMRC will register the partnership separately from any sole trader registrations. You’ll need the partnership UTR and trading name.

If you’re based abroad

Subcontractors based outside the UK who carry out construction work in the UK must still register for CIS.

What happens next

HMRC will confirm your registration in writing and let you know what information you’ll need to provide to your contractors before they pay you.

Supervision, Direction, Control (SDC)

For the purposes of the Agency Legislation, HMRC consider Supervision, Direction, or Control to be best defined as follows:

Supervision is someone overseeing a person doing work, to ensure that the person is doing the work they are required to do, and it is being done correctly to the required standard. Supervision can also involve helping the person, where appropriate, in order to develop their skills and knowledge.

‍Direction is someone making a person do their work in a certain way by providing them with instructions, guidance, or advice as to how the work must be done. Someone providing direction will often coordinate how the work is done as it is being undertaken.

‍Control is someone dictating what work a person does and how they go about doing that work. Control also includes someone having the power to move the person from one job to another.

Where can I find more information on CIS?

The GOV.UK website provides comprehensive information about the Construction Industry Scheme (CIS), including a dedicated section on "What you must do as a CIS subcontractor." This section outlines the key responsibilities and steps required for subcontractors working under CIS, such as registration, record-keeping, and managing tax deductions.

Booklet 340, available on GOV.UK, offers detailed guidance for both contractors and subcontractors. It explains who needs to register, what types of work and businesses are covered, how payments and tax deductions are managed, and the obligations for both roles under the scheme. This booklet is especially helpful for those seeking in-depth rules and examples.

Additional support and resources

HMRC CIS Helpline: If you have specific questions or need assistance, you can contact HMRC’s CIS Helpline. The helpline provides support for general enquiries, resolving issues, and clarifying CIS requirements. Note that due to occasional industrial action, wait times may be longer, and using online services is encouraged when possible.

Tax Facts Film: HMRC has produced a "Tax Facts" film aimed at school leavers and those new to the construction industry. This video explains the basics of CIS, including how it works and what new subcontractors need to know.

Register as a Sole Trader

These resources collectively ensure that both contractors and subcontractors can understand their obligations and get help when needed under the Construction Industry Scheme.

Right to Work (RTW) in the UK/TrustID

How do I complete the TrustID check?

As part of the registration process with Odyssey Contractor Solutions, you will receive a unique link to complete a RTW check via TrustID.

This check must be completed on a mobile phone with internet access and both a front- and rear-facing camera. TrustID will guide you through the following steps:

‍Step 1 – Open the link in the email on your mobile phone. This will open the RTW check in your browser and take you through the first set of questions.
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‍Step 2 – If you have a UK or Irish passport, select ‘Yes’ when prompted and use your rear-facing camera to take a clear photograph of the full photo ID page of your passport. Ensure all information is visible, including the numbers along the top and bottom, and that there is no blur or glare.
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‍Step 3 – If you do not have a UK or Irish passport, select ‘No’. TrustID will then ask you to enter a Share Code to verify your online Right to Work status using the government Share Code system. If you need to generate a new Share Code, you can do so here: https://www.gov.uk/prove-right-to-work
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‍Step 4 – You will be prompted to take a selfie using your front-facing camera. Make sure you are in good lighting and take a clear photo of your face so it can be matched to your ID documents.
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‍Step 5 – TrustID will then ask you to enter your address. Enter your postcode and select your address from the drop-down list.
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‍Step 6 – You're done!

How will TrustID treat my data?

TrustID is audited and approved by the Home Office.

Your information is securely stored for a maximum of 7 days, after which it is automatically and permanently deleted from their systems.

Why do I need to complete an ID check?

All UK employers are legally required by the Home Office to carry out RTW checks for every new employee.

Because we do not meet you in person, we must complete this check using a Home Office-approved Identity Document Validation Technology (IDVT) provider. TrustID allows us to verify your identity and RTW digitally in a secure and compliant way.

More information on IDVTs can be found here: https://www.gov.uk/guidance/identity-document-validation-technology-idvt-for-right-to-work-checks

I've already done one of these checks - why do I need to do it again?

Even if you have already completed a RTW check with your recruitment agency or end client, Odyssey Contractor Solutions is still required, as your employer, to carry out our own verification to ensure we comply with Home Office legislation.

Why do I have to take a picture of myself?

In a face-to-face ID check, your documents would be verified in your presence so we could confirm you are the genuine holder of those documents.

Because we are completing a remote digital check, TrustID uses facial-matching technology to compare your photo ID with the selfie you provide. This ensures the same level of security as an in-person check.

Will the ID check leave a mark on my credit file?

No, the TrustID check will not leave a hard search on your credit file.

TrustID performs a soft check, which may appear on your credit profile but does not affect your credit score or eligibility.

This soft check helps verify your address and identity and also screens for AML (Anti-Money Laundering) flags, PEPs, and sanctions.

All documents uploaded to TrustID are deleted within 7 days.

How do I get a Share Code?

A Share Code is a secure code you can generate to prove your RTW or immigration status in the UK. You may need it when starting a new assignment, registering with an agency, or joining an umbrella company.

You can generate a Share Code by using the official GOV.UK service: https://www.gov.uk/prove-right-to-work

‍Once generated, the Share Code is valid for 90 days and can be shared with employers so they can check your RTW.

Do I need to complete my RTW check before I am paid?

Yes. We cannot release any payments until your RTW check has been completed and approved in line with Home Office legislation.

What happens if I fail a RTW check?

If you do not have a valid RTW in the UK, we are legally prohibited from employing you. We must inform your agency or end client, and in certain cases, the Home Office may also be notified.

If you run into any error messages whilst submitting the check, click the button on the right to check out an article which covers some of these topics. If this does not help resolve any issues you are having, please contact our Customer Care team for assistance.

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Frequently Asked Questions

Umbrella

CIS

Right to Work (RTW) in the UK/TrustID