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Umbrella

How to Change Umbrella Company

If you’re looking for a new umbrella company, it’s normally for one of two reasons; either something has gone wrong, or your current umbrella isn’t on your new recruitment agency’s preferred supplier list (PSL). In this guide we’ll look at the process for switching umbrella company, as well as sharing some important tips on how to choose a good one.

Changing umbrella company because of PSL issues

If you’re switching umbrella company because your agency says you have to, we know this can be frustrating. If you’re with a good, compliant umbrella and you’re happy with the service you’ve received, it might be worth speaking to your agency to see if the issues can be resolved. If they can’t, there are two things to remember:

  •   Your new agency might have a good reason for not wanting to work with your current umbrella.

  • Your new agency is not allowed to insist that you sign up with an umbrella that’s owned by or connected to them, but they are allowed to refuse to work with any company they like. Contrary to popular myth, a recruiter does not have to work with your choice of umbrella company.

Choosing your new umbrella company

It’s a good idea to confirm that there are no fees for joining or leaving, or completing administration tasks like issuing a P45.

Depending on your situation, you might want to check your pension options. Find out about the workplace pension your umbrella will auto-enrol you onto, and whether they’ll help you contribute to your own pension instead. Do they offer a salary sacrifice option, and if so, how will it work?

Finally, we recommend that you check what employee benefits they offer. For example, Orange Genie employees receive a whole host of additional benefits designed to make their money go further, help them care for themselves and their families and get more out of life as a contractor. It may seem like a minor consideration, but it makes a huge difference to our employees. 

The process of making the switch

The process should be straight forward, and a good umbrella company should be able to lead you through it. You’ll simply need to:

That’s it – your new umbrella will handle everything else on their side.

Sorting out your tax code

When you switch to a new umbrella company, it can take a few weeks for your old umbrella to issue your P45. This shouldn’t hold up your payments as you can complete a starter declaration when you register with your new umbrella, and forward your P45 to them when you have it.

If HMRC believe you have two employers, they may issue a change of tax code to remove or reduce your allowance of tax-free pay through the new umbrella company, which could result in a temporary overpayment in tax. This is most likely to happen after your new umbrella pays you for the first time.

A phone call to HMRC will usually resolve this issue, and any overpayment should be corrected the next time you’re paid. Your new umbrella company will be able to give you their PAYE reference, which you will need when you contact HMRC.

Once you’ve settled on a good umbrella company

Once you’ve found a good, compliant umbrella company who meet your needs, you’ll obviously want to stay with them if you can, rather than moving around. This allows you the benefits of continuous employment, and it saves you the trouble of signing up with another employer every time you work for a new agency or client.

For this reason, it’s a good idea to choose an established umbrella company who will be recognised and trusted by a wide range of clients and recruiters, so you’re less likely to need to switch in future.

Signing up with Orange Genie

If you’re a contractor and thinking about switching to Orange Genie Umbrella or if you have any other questions about umbrella employment, simply give us a call on 01296 468 483 or email info@orangegenie.com.

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