Once you’ve signed up to the umbrella of your choice, you’ll need to provide them with proof of ID, your address and P45. They will then get in touch with your agency to request a copy of your contract. You become the umbrellas employee under an overarching contract, with a view to carrying out a succession of assignments for various agencies/clients during the course of that employment.

To enable you to work for an end client, your umbrella will enter into a contract with your agency. You carry out your contracted duties at the temporary workplace. You email your timesheets to your umbrella company, and they’ll invoice your agency.

The agency or end client will pay your umbrella a rate the contract rate to cover payments for the work you have completed. This will also include all the costs related to your employment such as employers NICs and holiday entitlement. This rate is higher than if you were paid PAYE directly by the agency / end client, to cover these additional costs.

If you are looking to have your own limited company, you will become a company director. As one of almost 1.3 million companies registered in the UK, you will have a number of statutory and financial obligations; you will have to submit annual accounts to Companies House (the registrar of companies in the UK), run the company solvently and responsibly, and meet your HMRC tax deadlines.

Fortunately, most of the legwork involved in running a company can be taken on by a specialist contractor accountant, although as a director you are responsible for meeting the company’s obligations. Most contractors operate via their own companies, and compare the umbrella would be happy to introduce contractor accountants who will be more than happy to show you the ropes.

One of the main benefits of contracting via a limited company is that it is the most tax-efficient way to operate. Unlike a permanent or umbrella employee, you pay yourself in the form of a basic salary (typically low), and the remainder is drawn down in the form of dividends. Dividends are not subject to National Insurance Contributions, which results in a significant tax saving.