Umbrella contractors should use their contract day rate, too

With the move to automatic payroll, most public sector contractors switched to umbrella companies. With a new IR35 mandate looming for 2020, private sector contractors could soon follow.

An umbrella company works because they still use limited company payment structures. But they also process payments, deduct fees and taxes and issue payslips.

True. A contractor might ‘take home’ a little less than through their own limited company. But there’s much less hassle and (often) a reduced risk of flaunting IR35 guidelines.

Armed with a payslip, umbrella contractors can get a mortgage easy, right?

data review meeting with notes, charts and graphsMany contractors will have struggled with accounts and High Street mortgage lenders before.

Having a contractor’s payslip in hand now should be a gamechanger, right?

Shouldn’t that clarify what is and isn’t relevant income for a mortgage affordability assessment?

Not quite.

Your umbrella payslips will still confuse your average in-branch advisor. They’re not the same as the PAYE payslips employees use. They show deductions that High Street advisors can’t squeeze into their risk assessments.

The same rule applies to umbrella contractors as it does to all independent professionals. If you want a lender to take your income seriously, you need a broker who gets contracting. One with a direct line to specialist underwriters is preferable, too.

But here’s the rub. Both specialist brokers and savvy underwriters are a rare commodity on the High Street. Save your shoe leather; begin your search for an umbrella contractor mortgage here online.



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