What are the disadvantages of Umbrella company?
Umbrella company disadvantages include reduced take-home pay due to employer's National Insurance contributions, limited control over business expenses, potential IR35 complications, and higher overall costs compared to operating through a limited company, making them less attractive for many UK contractors seeking to maximise their earnings.
Last updated
August 4, 2025
By
Jordan MaceyRead our quick summary:
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The drawbacks to working through an umbrella company are:
- You'll have less control compared to running your own company.
- You may find it more tax efficient to operate through a limited company.
- There are a number of umbrella companies operating illegal arrangements, so you'll need to exercise caution before signing a contract.
The drawbacks to working through an umbrella company are:
- You’ll have less control compared to running your own company.
- You may find it more tax efficient to operate through a limited company.
- There are a number of umbrella companies operating illegal arrangements, so you’ll need to exercise caution before signing a contract.