Switching Umbrella Companies
A step-by-step guide to switching without disrupting your pay — including timing, notice, P45 handling, and what to watch out for.
Last updated: April 2026
Why Contractors Switch Umbrella Companies
The most common reasons to switch are: finding a lower margin (fee), moving to an FCSA-accredited provider, dissatisfaction with payslip transparency, or being asked by an agency or end client to use a specific umbrella.
Switching is administratively simple — it does not affect your contract with the agency or end client, and there is no legal complexity. The main risks are a delayed P45 causing temporary emergency tax coding, and losing accrued (but unclaimed) holiday pay.
Step-by-Step: How to Switch
Research and compare umbrella companies
Compare margins (fees), FCSA accreditation status, payslip transparency, and reviews. Use our calculator to verify the take-home figures they quote you.
Check your current notice period
Review your employment contract with your current umbrella. Notice periods are typically 1–4 weeks. Some have no notice period if you have not yet started a contract.
Register with the new umbrella
Complete the new umbrella's onboarding — ID verification, right to work checks, bank details, pension election, and holiday pay preference.
Notify your agency
Tell your recruitment agency the name, Ltd number, and payment details of your new umbrella. The agency updates their payroll — future timesheets are paid to the new umbrella.
Give notice to your current umbrella
Submit your resignation in writing. Ask them to confirm: (a) final pay date, (b) P45 issue timeline, and (c) any accrued holiday pay balance.
Chase your P45
Your old umbrella must issue your P45 promptly after your employment ends. Pass it to your new umbrella immediately to avoid emergency tax coding on your first new payslip.
The P45 and Emergency Tax
The most common issue when switching is a delayed P45. Your old umbrella must issue a P45 when your employment ends. If your new umbrella starts paying you before receiving the P45, they must use an emergency tax code (typically 1257L M1 — month 1 basis).
Month 1 basis means only 1/12 of your Personal Allowance is applied each pay period — which can significantly overtax you in a high-earning month. To resolve this:
- Chase your old umbrella for the P45 immediately after leaving
- Pass it to your new umbrella the moment it arrives
- If unduly overtaxed, HMRC will correct this once the code is updated, or you can reclaim via self-assessment
Accrued Holiday Pay
If your current umbrella uses an accrued holiday pot model, you may have unspent entitlement. Ask for a holiday pay balance statement before you leave and ensure any balance is paid out in your final payslip. Unclaimed holiday pay is sometimes lost if not specifically requested.
Checklist Before You Switch
Verified new umbrella is FCSA-accredited at fcsa.org.uk
Compared the weekly/monthly margin (fee) — asked for written confirmation
Confirmed new umbrella's holiday pay model (rolled-up or accrued)
Checked notice period in current employment contract
Notified agency of new umbrella details (Ltd number + bank details)
Requested holiday pay balance statement from current umbrella
Confirmed final pay date and P45 issue date with current umbrella