The future of Umbrella Companies

An umbrella company employs direct contractors or agency contractors who work on temporary contract assignments, usually through a recruitment agency. This form of company is strongly associated with the UK where it has become increasingly popular since IR35 came into effect. They first became popular in the 1990s. These structures only relate to PAYE Umbrella structures as Director Umbrella structures, popular in Ireland, are banned in the UK for quite some time (since the Mid 2000s). The reason these structures are popular is Recruitment agencies opt to issue contracts to a limited company as the agency liability would be reduced. Umbrellas issue invoices to the agency (or client) and, when payment is received, will pay the contractor via PAYE while reducing tax on the income through claiming expenses such as travel, food, and accommodation.

So what is the future of Umbrella structures? There is no doubt that these structures will continue to grow in popularity in the UK as the PAYE Umbrella option is very flexible for agencies, companies and contractors alike. In Ireland, Umbrellas are going through a period of change. Director Umbrella structures, once popular, are now coming under increasing review due to the structure itself and due to the introduction of IR35 in the UK quite some time ago. We will see contractors moving away from these structures to use their own personal limited company or to PAYE Umbrella structures which offer ease of use and don’t require directorships for contractors which is something many of them do not want the burden of holding.

Accounting Pro is Ireland’s premier contractor accounting service.  We are here to help, the busy contractor and company, with all your accounting and payroll needs. We are both an umbrella company and umbrella corporation and we can create your limited company. We are experts in contractor pensions, contractor health insurance, illness and sick benefit for the self employed and contractor expenses. To learn more about what we do please review  and contact us by email: or phone us 01 6933370. For the UK see Accounting-Pro UK. “The future of Umbrella Companies” is an article written by Accounting-Pro Ireland for the benefit of everyone. Feel free to share it but please give attribution on a CC BY-SA license.