Agencies and travel to work

[m_attt]

Conor:

m_attt:
Umbrella costs £490 a year. Tiny bit more than an accountant with less hassel. Not £30 p/w. Give it a try you will be better of than on Paye.

Really? Umbrella you mentioned is a tenner a week or 25p per hour out of the first 40hrs. Statutory holiday pay is 12% of your hourly basic wage. If you’re on £7/hr on PAYE and you get an extra £1/hr please tell me how 84p holiday pay you lose out on +25p umbrella admin fee is made up for by being paid an extra £1/hr. If you do less than 40hrs in a week or get paid more than £7/hr it gets even worse as that extra £1 an hour is even less capable of covering what you lose and what it costs you.

Other than the umbrella company admin fees there’s not a single expense you claim via the umbrella company that you cannot claim on PAYE working for agency.

because i was on a lot more than £7 paye, and a lot more than a £1 ph extra when moved to umbrella. it costs me £9.50 a week and Ive ended up with loads more money in pocket each week. so rather than telling the poster its a load of rubbish i said try it for him self and find out. as not all of them a bad.

[liberty_guy]

My ‘other’ trade is electrical, mainly building control panels. Two agencies I did work for in the past both tried to push this umbrella scheme and effectively refused work when I said I wanted to stay PAYE. One actually had the cheek to suggest it what the customer had requested. It seems it is an agency thing in general, rather than a driver specific ‘scam’.

[mac12]

Euro you show your expenses as near enough £10000 do you get that or just the tax back at 20% so £2000

[winseer]

Conor:

Winseer:
If you want the whole Ltd/Umbrella/Zero hours thing ripped up, then you’d better look at voting Labour.

Why? They started and massively expanded under Labour. Labour did nothing to stop it in the 13 years they were in power.

I understand the new Labour project is “anti zero hours contracts”. What someone who isn’t Milliband did before doesn’t count therefore.

[ader1]

I spoke to the umbarella company today ‘Freegate’ and also the Agency. Freegate told me their fee is £18 per week. I mentioned that being employed as an agency worker that my salary next week could be for just a day’s work. She said that if your salary for a week is less than £170, then the fee is dropped to £5. I get paid £9 per hour. I’m not to keen though to pay and umbarella company what amounts to almost a day’s wages if I can avoid it.

I spoke to a bloke at the agency and he said that I would have to use the umbarella. There was no way around it. He wan’t able to tell me much because I don’t think he understands it himself. He’s just repeating the company line. He said to me that you can make these claims on around 50% of your tax liability. Can anybody expand on this?

[peirre]

Ader1:
I spoke to a bloke at the agency and he said that I would have to use the umberella. There was no way around it.

He lying …don’t be railroaded into using a payroll company if you don’t fully understand what’s happening

[ader1]

Fine…you say that he’s lying but you’ve got to provide some information to back that up. I can’t go back to him on Monday and tell him he’s lying 'cos some bloke on the internet said so.

[suavecolliedog]

When I was agency I was using a umbrella company for the first four weeks until I realised what a rip off it was and became a sole trader. I was being charged £25/£30 a week using umbrella and still having to pay my class 2 NI contributions on top of that. Compared to a one off payment of £160 annually to my accountant. I later found out the umbrella company was owned by the agency, maybe explaining why they only allow you to go with certain umbrella companies.

The other reason they use it, apart from the obvious of not having to pay employer NI contributions, and pay redundancy payments, is if you are a ‘self employed’ driver they don’t have to offer you the same benefits as full time drivers on the contract you are working on may be getting such as same holiday entitlement, paid breaks, uniform etc after 12 weeks on that particular contract.

If I was to go down this route again I would go limited company. Bit more of a pain to set up but gives you greater flexibility of who you work for as most agencies wont allow you to be a sole trader. But I would definitely steer clear of umbrella companies, biggest scam going!

[ader1]

Thank you…but I don’t go to an agency for the hell of it. Companies use agencies not because they want one person but because they continuously use them for remp staff and sometimes permanament too and also for providing different skills. I go to the agency because I know that companies are there looking for people.

[peirre]

Ader1:
Fine…you say that he’s lying but you’ve got to provide some information to back that up. I can’t go back to him on Monday and tell him he’s lying 'cos some bloke on the internet said so.

The reasons why they want you to use it are obvious, and previously stated. So there`s not really any point reiterating it, so the choice it yours if you use them or not.

Theres an additional amount of bookkeeping work required if you go [u]full[/u] S/E, let alone FULLY understanding whats involved. Which is why I state you should only go down this route if your in it for a few years, and armed with as much info & training as possible. Because after working a week at max hours most don’t want the hassle of the extra work doing admin, not that there is much to do once you grasp whats required, especially regarding HMRC (but it can vary from 10mins to 45mins) which is why many choose to use umbrella/payroll companies, and would rather let someone else, usually a umbrella/payroll company sort it out for them, so that they just get a payslip and money in the bank, much like being employed by a company. Of the 100s of agency drivers I regularly encounter, only 8 (inc me) have gone down the full S/E route and administer their finances and invoicing, bookkeeping etc and only cross paths with an accountant once a year, the rest use 1 of a handful of payroll companies. Many of those state that they don`t want the hassle, many more have been railroaded into using umbrella/payroll companies by their ignorance, lots aren’t computer literate & not able to use simple spreadsheets (Microtosh office comes with everything you need), let alone be able to send an email with a timesheet and invoice attachment, some are semi-retired with a pension & a handful are only there until they get another full time job.

Do I know what I`m talking about …maybe, but I have been doing this agency lark for a year or two, or should I say a decade or more

[conor]

Euro:
some of my expenses
Tax return 2012-2913

daily subsistence 95 £13.50 £1,282.50

Does not compute. Doesn’t meet the HMRC allowances. You cannot get multiples of £5 to reach £13.50. Do you have receipts for every one of those 95 meals you’ve claimed for?

Office use 52 £10.00 £520.00

You must have really cheap mortgage/rent.

PPE 0

Why no claim for PPE? Do you not wear safety boots, use gloves, wear hi-viz?

The majority of the rest other than the computer and a couple of others office related you can also claim on PAYE. Talking of the computer, I hope its not got any personal photos, personal bookmarks, personal emails etc on because if its shared use you can only claim the percentage of use which is business use.

mac12:
Euro you show your expenses as near enough £10000 do you get that or just the tax back at 20% so £2000

20% of what he claims assuming he earns enough pre-tax income to cover the tax free allowance plus what he claims. He doesn’t actually get any money back rather that his tax bill is reduced by that amount.

[mac12]

Conor I know that so if he only gets £1 per hour more than PAYE but has all other costs and loss of 28 days holiday pay how much better off his he.

[conor]

Ader1:
Fine…you say that he’s lying but you’ve got to provide some information to back that up. I can’t go back to him on Monday and tell him he’s lying 'cos some bloke on the internet said so.

If they are taking you on on a self employed basis as a supplier of services to the agency then by law they cannot dictate how you operate your business. Also for it to qualify as legitimate self employment they can’t tell you who to send either so if they give you a day’s work, you decide you can’t be arsed and choose to send a mate in instead and you pay him they cannot have any say over that.

What we’re telling you can be easily found on HMRC’s website.

“Am I self employed?”

hmrc.gov.uk/employment-status/index.htm#1

HMRC:
As a general guide as to whether a worker is an employee or self-employed; if the answer is ‘Yes’ to all of the following questions, then the worker is probably an employee:

Do they have to do the work themselves?
Can someone tell them at any time what to do, where to carry out the work or when and how to do it?
Can they work a set amount of hours?
Can someone move them from task to task?
Are they paid by the hour, week, or month?
Can they get overtime pay or bonus payment?
If the answer is ‘Yes’ to all of the following questions, it will usually mean that the worker is self-employed:

Can they hire someone to do the work or engage helpers at their own expense?
Do they risk their own money?
Do they provide the main items of equipment they need to do their job, not just the small tools that many employees provide for themselves?
Do they agree to do a job for a fixed price regardless of how long the job may take?
Can they decide what work to do, how and when to do the work and where to provide the services?
Do they regularly work for a number of different people?
Do they have to correct unsatisfactory work in their own time and at their own expense?

Then there is the HMRC rules which apply to agencies that changed from April 6th 2014

Print this out and show him this:

hmrc.gov.uk/manuals/esmmanual/ESM2037.htm

This is the bit that is the important part…

“Where a worker is engaged by or through an agency, there will be a presumption that there is (or there is the right of) supervision, direction or control over the worker. This means it is the responsibility of the agency that contracts with the client to whom the worker provides their services to operate PAYE (see ESM2039) and act as the secondary contributor for NICs (see ESM2040). When the agency does not consider a worker is subject to (or to a right of) supervision, direction or control by any person, then they will need to keep evidence of this (see ESM2042). HMRC may recover tax and National Insurance contributions from the agency if they are unable to produce satisfactory evidence when requested to do so by HMRC.”

And give him this as well…

hmrc.gov.uk/manuals/esmmanual/ESM2042.htm

And highlight this part…

"From 6 April 2014, UK agencies supplying workers directly to a client on a self-employed basis must have in their power or possession satisfactory evidence to demonstrate the worker is not subject to (or to the right of) supervision, direction or control (see ESM2037) by any person, in relation to the manner in which the worker provides their services.

HMRC do not consider a signed declaration from the worker that simply states they are not subject to (or to a right of) supervision, direction or control by anyone, constitutes sufficient evidence for the purposes of the Agency Legislation.

If the agency is unable to produce satisfactory evidence when requested by HMRC, then HMRC may recover from the agency the income tax and National Insurance contributions due from the worker’s remuneration."

Basically the ESM2037 link says HMRC considers agency workers under direct control because they tell you when and where you’re going to, the client tells you what hours you’re working and you are not free to send someone to do the work for you therefore you are classed as being under supervision, direction or control - if you were truly self employed it would be you deciding who you worked for, when you worked. who did the work and how you did the job. The second link to ESM2042 tells them that as the agency worker is under direct control the agency has to operate PAYE. The last but in bold is important for anyone doing agency work Ltd/umbrella. HMRC will come after you for the tax due on the expenses you’ve claimed that you weren’t actually eligible for, not the agency. That also has a knock on effect for any income based benefits you claim such as tax credits because you will have told them your income was what you got paid after expenses and these expenses won’t count if HMRC catch up with you meaning you under-declared your income. It could lead to you having to repay a year or more of tax credits.

And that’s why you do PAYE on agency and if you do self employed, do it properly.

[conor]

mac12:
Conor I know that so if he only gets £1 per hour more than PAYE but has all other costs and loss of 28 days holiday pay how much better off his he.

He isn’t because pretty much most of the expenses, certainly the ones that amount to the largest chunk, he can claim as expenses in employment on PAYE. The thing is that the majority of agency workers on PAYE are unaware they can claim and that is what agencies bank on. Believe me they don’t like it when they come across someone who does know about tax and tells them they’re talking crap.

OK some quick figures based just on the holiday pay you lose. Say you’re on £8/hr. Statutory holiday is 5.6 weeks and doesn’t include overtime so holiday is worth £1792. (£8 x 40hrs x 5.6)

You’re on £9/hr on s/e or umbrella. For 40hrs a week for 46.4 weeks a year (full year less the 5.6 weeks holiday you take) you’re earning an extra £1/hr so that totals £1856.

You’re up by £64.

But now you’ve got the umbrella fees to pay. Seen various mentioned so we’ll choose £15/week as a medium. 47 weeks fees = £705. (they’ll charge a full week even though you only work 0.4)

So you’re now you’re worse off than PAYE by £641 but because of how tax and expenses work you’ll get back 20% of that £705 so you’re £500 worse off than agency.

“But you can claim expenses on Ltd/umbrella” I hear you cry. But as I and others have said, you can also claim them on PAYE too so there’s no point including them.

So when is umbrella/Ltd better than PAYE on agency? Despite what I posted there are some situations where it is better - when you’re on PAYE and don’t claim the expenses you’re entitled to. So if you’re the kind of person like my mate who can’t be bothered keeping records and receipts and filling in a P87 once a year you’re better off going Ltd/umbrella and letting someone do it for you - you just won’t be as well off as you could be and you’ve kissed away your employment rights. Working for an agency via umbrella/ltd pretty much never leaves you better off than someone who does claim expenses you’re entitled to on PAYE.

One thing that nobody has mentioned is the Agency Workers Regulations. If you’re with an agency on PAYE and do 12 weeks with a client you are legally entitled to the same pay/conditions as that clients employees unless the agency uses the Swedish Derogation but then they have to pay you when you’re sat at home when there’s no work. If you use an umbrella company/Ltd you don’t qualify for AWR so the 12 week rule doesn’t apply so you don’t get the same pay as the place you’re at if they pay more and you don’t get paid to sit at home. I’ve worked at a few companies over the years where even getting an extra £1-£2/hr, claiming expenses and even using the flat VAT loophole doesn’t bring you close to what that company’s drivers get as a salary.

The whole thing is a massive con reliant on the gullibility and ignorance of taxation of people who sign up to these things. Its the equivalent of buying an extended warranty when you buy a TV even though sale of goods act/EU directives cover you for any defects anyway and your household insurance already covers you if you damage it. Lots of people buy extended warranties because they’re unaware of their rights.

[winseer]

Isn’t the bottom line here - the bottom line!

I don’t give a ■■■■ about claiming for this, that, and the other.
I just want a substantially higher hourly rate for my services IF I’m going to carry all the risk management on my own shoulders.
“£1 an hour” don’t cut it.

I reckon £4-£5 over PAYE rates for the same job is about right.

ONCE you’ve secured your £15-£20ph rate, THEN you worry about “how to get your tax bill down” seeing as working a reasonable number of hours per week at those rates is going to put you into higher rate tax. Easy. Earn some money, and then get to take home more of it.
Earning near minimum wages, on the other hand, - and then trying to over-claim allowances from HMRC is an idiot’s charter at best.

You are supposed to be a “Professional” which is defined as "what you do for the majority source of one’s income".
Claim too much from HMRC, and get paid too little gross to start with - and you are a professional tax avoider instead. Not good.