date posted: 12-01-2017

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Changing umbrella companies can be a daunting prospect. There are a number of potential pitfalls when changing umbrella companies and contractors often switch for the wrong reasons.


There are also a number of genuine reasons why it might be a good idea to change umbrella companies. If you are dissatisfied with the service or pay you receive then it is a good idea to start researching other umbrella companies with an outstanding reputation.


However, many contractors switch umbrella companies frequently because their recruitment agency pressured them to do so or because their current contract completed.


The advantages of sticking with a reputable umbrella company


You do not necessarily need to move umbrella companies when you change recruitment agency. Recruitment agencies often have preferred umbrella companies they like to work with but if you are satisfied with the service from your current umbrella company you are well within your rights to ask your recruitment agency if you can continue with your current provider.


Changing a recruitment company can feel like a hassle and it can become increasingly complex if you should decide to move mid contract, so think carefully before initiating a switch.


The best umbrella companies, like Sterling, reward loyal contractors. We are 100% compliant, always deliver a dedicated and caring service to all our contractors and many have chosen to stay with us for over 10 years because they are so satisfied with our service. By choosing Sterling you can gain extra exclusive benefits you would not receive with other umbrella companies such as our Sterling Rewards scheme.


What to do if you do decide to move 


If you are currently with another umbrella company and have become dissatisfied with your service Sterling make it as easy as possible to make the switch to us. Follow our guide on how to change umbrella companies below:


1) Before initiating the move, you should always thoroughly research your prospective new umbrella company first. You need to make sure the company you are moving to is compliant. Historically there have been many incidents with non-compliant umbrella companies taking advantage of contactors. To make sure you are choosing a compliant umbrella company investigate the fee structure, customer service and if there are recommendations from other contractors. Sterling have a firm reputation among our contractors and our website includes detailed information of how we work from pay calculators to margins and even advice on health and safety so contractors know their rights and know what to do if they find themselves working in unsafe conditions. Sterling pride ourselves on making sure our contractors are taken care of.


2) Having made your decision, you will need to contact your current recruitment agency and confirm that they are happy to work with your new umbrella company.


3) Now you can register with your new umbrella company. You will need to provide them with contact details for the recruitment agency who are finding you work.


4) After this step, you need to inform your old umbrella company that you want to leave. Make sure you request your P45 after receipt of your final payslip.


5) With some umbrella companies, you may have a notice period before switching so be prepared for this. It is rare but some umbrella companies could also require an exit fee.


6) Having received this, confirm with your recruitment agency once again that you are switching umbrella companies.


  1. 7) Although switching umbrella companies may seem stressful, if your previous company was reputable they should not put obstacles in the way of you switching. When joining your new umbrella company, you will need to go through an identity check, provide personal details and forward your P45 to your new umbrella company. This will allow them to set up your payroll. If you have not yet received your P45 from your previous umbrella company your P46 will suffice initially.

In addition to following these steps contractors should be aware of other potential stumbling blocks when switching umbrella company:


Be aware that HMRC may change your tax code. This is simply because of the quick change in employer from your previous umbrella company to the new one. HMRC believe the new umbrella to be a second employer at times. This can mean they remove or reduce your tax allowance. If this happens to you all you need to do is get in contact with HMRC.


Other obstacles to a smooth transition include changing umbrella company part way through a contract. This is due to the fact that new contracts will need to be signed with the new umbrella company and your agency or client. Agencies are normally accustomed to this procedure but if you are working with an end client directly you may need to explain the situation to them.


If you switch umbrella companies mid contract you will also need to stay in touch with both umbrellas as it can take a while for invoices and expenses to be sorted out.


The Sterling guide on how to change umbrella companies should give you everything you need to make the transfer. If you are considering moving to The Sterling Group simply fill out the appropriate form on our website or give our friendly registration staff a ring.


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