HGV drivers have a few avenues for finding work. You can join a haulage or logistics firm, or work as a fleet driver for a company. Or you can work as an independent owner operator.
If you take the independent route, there are many benefits to joining an umbrella company.
In this post we’ll explain how umbrella companies for HGV drivers work and outline some things you should consider before you join one.
What is an Umbrella Company?
An umbrella company works as an intermediary between a contractor and their clients, or a contractor and a recruitment agency. Self-employed contractors can join umbrella companies, and in doing so, you become one of their employees. The umbrella company will then take care of invoicing clients for you. They’ll also pay your salary, which means you’ll pay tax through the Pay As You Earn (PAYE) system.
What’s An Umbrella Company for HGV Drivers?
Many independent HGV drivers find work through recruitment agencies. Clients contact the recruitment agencies specifying their needs. The recruitment agency will then seek HGV drivers to fulfil these needs. Many of these may ask you to join their umbrella company to take on this work.
When working with contractors, clients will have to consider certain off-payroll working rules. These rules, often referred to as “IR35”, are there to ensure that contractors pay essentially the same Income Tax and National Insurance contributions as they would have done if they were employees.
If the client decides that off-payroll working rules apply to the role they need to fill, they’ll likely advertise the role as being “inside IR35”. This means that either the client or the recruitment agency will ask you to become an umbrella company employee before you take on the role.
So essentially, the recruitment agencies will use an umbrella company to pay their contractors. They’ll agree your terms of employment, including the duration of the contract and your wages.
The recruitment agency might request you to sign up to one of their preferred umbrella companies, or you may be free to choose your own.
The Benefits of Joining an Umbrella Company as an HGV Driver
If you join an umbrella company as an independent HGV driver, you essentially get the best of both worlds. You get all the flexibility of being a self-employed contractor. But as you’ll be an employee of the umbrella company, you’ll also be eligible for employment rights. These include sick pay, holiday pay, and a workplace pension.
Also, as you’ll pay tax through the PAYE system, there’s no need to worry about keeping your own financial records, and no need to worry about submitting annual self-assessment tax returns.
Plus, joining an umbrella company is often a prerequisite for finding work with a recruitment agency. And for HGV drivers, working with a recruitment agency can be the fastest way to find stable and lucrative haulage work.
The alternative is to establish yourself as an independent owner operator. As we outlined in our full guide, the cost of setting up as an owner operator can build up.
Maybe your long-term goal is to work as a fully independent owner operator, perhaps with your own fleet of vehicles. This can certainly be the most financially rewarding route for HGV drivers. But getting there can take time. If you need work and financial security now, using recruitment agencies and umbrella companies might be your best option.
Don’t Forget Your Insurance
One thing umbrella companies probably won’t take care of for you is your commercial vehicle insurance. You may still have to manage this yourself.
This is where an expert insurance broker can help you. They can help you ensure you don’t pay for cover you don’t need, without putting yourself at the risk of financial loss by not having cover you do need.
If you are looking for insurance for your HGV or truck, then talk to us at Anthony Jones. Our expert teams will take the time to understand your business and the risks you face. We can then help you secure the right insurance cover for your owner operator business. Talk to us today on 020 8290 9099 or email us at firstname.lastname@example.org