Practical Law UK Glossary 1-502-7452 (Approx. 2 pages)
Glossary
Umbrella company arrangement
In an umbrella company arrangement, the worker is an employee of a company, and is subject to tax and national insurance under PAYE. The worker is not:
A director or shareholder of the company.
Involved in the running of the company in any way.
The company will not source work for the worker. It is usually the worker who arranges temporary work, either through an employment agency or directly with a client. The umbrella company invoices the client for the worker's services and handles pay and tax matters for the worker in return for a weekly or monthly fee.