I’ve just been signed up with a new agency saying they pay PAYE but I’ve now had a phone call from their umbrella company saying I get holiday pay (I don’t - a deduction is made to fill a pot!) sick pay (I don’t, just SSP) and they call it PAYE because I get tax deducted on what looks like self-employed wages…
I’ve already worked out I need 30+ hours to make it pay, so it seems I’ll be turning down any odd shifts that might be offered.
My question is "How come an umbrella can pretend to be PAYE like this? I’m not even sure I’m getting the celebrated “£1 an hour extra” here?
With the end of the tax year nearing, it will be interesting to see what HMRC think of it all as well. They’ve already told me at HMRC that they consider “salary sacrifice” to be a legal loophole that they aim to close in due course…
Think this is going to be an increasing problem,when the tax man comes ‘knocking’ it won’t be on the schemers door,all these payroll/umbrella co’s,are just parasites,taking money off the wages of workers.
I was with Essentual a while back and they totally shafted me with the tax.
They used up my total tax free allocated amount in the first few months, i.e. I paid no tax at all, then on full tax thereafter but I didn’t stay with them for the full year so I was on full tax for every penny earned after that.
In my opinion you are better being self employed, register for your UTR number, tell the agenct to send you the cash earned and you will invoice them. Then either employ an accountant or self assesment.
I also got a letter from the taxman wanting to talk to me about my involvement with Essentual, yes they are trying to close the loopholes.
The taxman has already closed the laundry allowance.
I look forward to the day when agencies are hammered by HMRC for making drivers become pseudo-SE as Ltd Co. so that drivers can go direct to the employers & cut out the middle men. I know it’s unlikely to happen in the near future, with the big agencies gradually increasing their hold, but it would be nice.
I have been self employed for 30 years and have done Agency work, as well as driving jobs direct for customers and operating my own vehicle for most of that time. I am now thankfully more or less retired and it is about four years since I did any Agency work, about three years before that the agencies that I did occasional work for said that HMRC would no longer allow self employed persons to invoice Agencies directly, only limited companies were allowed to do this. This is when many schemes were set up for drivers to be limited companies employing themselves under various ‘umbrella’ schemes, all seemed dodgy to me and after employing an accountant and paying income tax and VAT on time for 20+ years I was not interested. I still did work for various Agencies occasionally but on a PAYE basis which didn’t make a lot of difference to me except that I was paying tax and registered with at least three different tax offices, keeping the boys at HMRC in work at least!!!
Sorry for all that stuff but I thought a bit of background might be useful to some, my main reason for posting is to find out what the situation is now, when I finished there was talk of HMRC clamping down on these umbrella companies, has anything happened.Reading the posts on this forum things seem as chaotic as ever, what is a UTR number and can genuine self employed persons now invoice Agencies direct ?
matamoros:
I have been self employed for 30 years and have done Agency work, as well as driving jobs direct for customers and operating my own vehicle for most of that time. I am now thankfully more or less retired and it is about four years since I did any Agency work, about three years before that the agencies that I did occasional work for said that HMRC would no longer allow self employed persons to invoice Agencies directly, only limited companies were allowed to do this. This is when many schemes were set up for drivers to be limited companies employing themselves under various ‘umbrella’ schemes, all seemed dodgy to me and after employing an accountant and paying income tax and VAT on time for 20+ years I was not interested. I still did work for various Agencies occasionally but on a PAYE basis which didn’t make a lot of difference to me except that I was paying tax and registered with at least three different tax offices, keeping the boys at HMRC in work at least!!!
Sorry for all that stuff but I thought a bit of background might be useful to some, my main reason for posting is to find out what the situation is now, when I finished there was talk of HMRC clamping down on these umbrella companies, has anything happened.Reading the posts on this forum things seem as chaotic as ever, what is a UTR number and can genuine self employed persons now invoice Agencies direct ?
A UTR is a uniquie tax reference numer, and there is nothing to stop you invoicing agencies direct, if you can find one that will let you. They mostly want you to go down the umbrella route. The HMRC telling them that you couldn’t was BS, if that was the case you couldn’t invoice anyone. It was just a scam to get you on the umbrella so they can get their cut.
In all honesty, if your using an agency your better off on PAYE direct, the extra £1/hr you get as SE/umbrella just isn’t worth it. I get £4/hrs more than agency pay on my SE work direct to firms, and thats the minimum I expect for it to go through my SE business. I’m PAYE with my current agency, and get holiday pay at a rate of the average of my last 13 weeks pay slips. I still claim the same expenses as the umbrella blokes do, and my accountants bill is under £500 (thats for a farm in partnership with my brother, my SE work, then mixing in the expenses and PAYE at basic rate)
I looked at the prospect of going SE, but decided against it because over the next year I want to be working part time and not full time. I’m never going to get a full time job on decent pay anytime soon, but there is good hourly rate stuff around in bits and pieces.
I wanted to be proper PAYE because when I pay emergency tax throughout the year, I end up getting it all back from the taxman direct at tax year’s end.
My worry with umbrella is that they might take advantage of that by applying for my overpaid tax back before time, and then guess what? They’ll advance me my tax rebate (over £1000 at this time) and then charge their damned percentage upon that!
For that reason, I am reluctant to take any work involving this agency this side of March 31st, but are my fears founded, or am I just being paranoid? I don’t like the idea of paying commissions, but the 6% mentioned if I get an extra £1 an hour surely pays for itself, so the catch has to be elsewhere I am thinking…
The “holiday” and “sick” pay is completely wrong. The money in the pot has been deducted from wages pound for pound. The client/umbrella & agency put in exactly nada, gar nichts, sweet FA from what I can see. The SSP is paid by the DSS, so “their” SSP would not apply in any case. If it DID, then I’d be getting pay from them before I’d done any work which is never going to happen is it?
For someone who’s intended average working week is around 25 hours, I can’t see me benefiting out of the system unless I get 30 hours plus in one hit. Fine for the occasions when a plum job comes up over the holidays, and my average has been a bit slack of late, but otherwise no.
I imagine this agency will chuck me in the shredder before march 31st once he works out what I am doing!
matamoros:
I have been self employed for 30 years and have done Agency work, as well as driving jobs direct for customers and operating my own vehicle for most of that time. I am now thankfully more or less retired and it is about four years since I did any Agency work, about three years before that the agencies that I did occasional work for said that HMRC would no longer allow self employed persons to invoice Agencies directly, only limited companies were allowed to do this. This is when many schemes were set up for drivers to be limited companies employing themselves under various ‘umbrella’ schemes, all seemed dodgy to me and after employing an accountant and paying income tax and VAT on time for 20+ years I was not interested. I still did work for various Agencies occasionally but on a PAYE basis which didn’t make a lot of difference to me except that I was paying tax and registered with at least three different tax offices, keeping the boys at HMRC in work at least!!!
Sorry for all that stuff but I thought a bit of background might be useful to some, my main reason for posting is to find out what the situation is now, when I finished there was talk of HMRC clamping down on these umbrella companies, has anything happened.Reading the posts on this forum things seem as chaotic as ever, what is a UTR number and can genuine self employed persons now invoice Agencies direct ?
A UTR is a uniquie tax reference numer, and there is nothing to stop you invoicing agencies direct, if you can find one that will let you. They mostly want you to go down the umbrella route. The HMRC telling them that you couldn’t was BS, if that was the case you couldn’t invoice anyone. It was just a scam to get you on the umbrella so they can get their cut.
In all honesty, if your using an agency your better off on PAYE direct, the extra £1/hr you get as SE/umbrella just isn’t worth it. I get £4/hrs more than agency pay on my SE work direct to firms, and thats the minimum I expect for it to go through my SE business. I’m PAYE with my current agency, and get holiday pay at a rate of the average of my last 13 weeks pay slips. I still claim the same expenses as the umbrella blokes do, and my accountants bill is under £500 (thats for a farm in partnership with my brother, my SE work, then mixing in the expenses and PAYE at basic rate)
I no longer work for Agencies but had several conversations and correspondence with HMRC main office at Bootle several years ago, and the answer was always the same- no direct invoicing of Agencies, a definite NO.I agree with you about the Agencies trying to force me into one of the umbrella, limited company, schemes but the result was the same in that none of the agencies that I used would accept my invoices.This despite being VAT registered and having a UTR for 20+ years and a good record with both as I explained. I also had my own customers whom I obviously invoiced accordingly.Regarding the BS, I don’t know about you but when a HMRC tax inspector tells you in writing that you can’t do something I tend to take notice, especially as agency work formed only a small proportion of my income at the time and all my usual expenses went through the books anyway.
matamoros:
I no longer work for Agencies but had several conversations and correspondence with HMRC main office at Bootle several years ago, and the answer was always the same- no direct invoicing of Agencies, a definite NO.I agree with you about the Agencies trying to force me into one of the umbrella, limited company, schemes but the result was the same in that none of the agencies that I used would accept my invoices.This despite being VAT registered and having a UTR for 20+ years and a good record with both as I explained. I also had my own customers whom I obviously invoiced accordingly.Regarding the BS, I don’t know about you but when a HMRC tax inspector tells you in writing that you can’t do something I tend to take notice, especially as agency work formed only a small proportion of my income at the time and all my usual expenses went through the books anyway.
Yet my tax office told me the oppersite, that was 4 yrs ago though, aslong as the agency wasn’t the only invoiced company (i.e. I had several clients not just invoicing 1 agency). As I said the extra quid didn’t make it worth my while so I didn’t persue it.
I think sometimes when dealing with government departments it can depend who and where you contact someone, I have found this over the years when dealing with VOSA. One hand doesn’t know what the other is doing !! Glad I am more or less out of it now, things are definitely not getting any easier.
I had the tax man give me crap over 20 yrs ago regarding driving on a S/E basis. It was, they said, a grey area. My answer was to sod off and come back when it’s black and white. I did very little through agencies, mostly direct with small hauliers and a couple of blue chip companies who could, if i had wanted, given me full time work. When they didn’t like my complete lack of respect for all the power they thought they had, they tried to put pressure on a couple of the companies I worked for and scare them into not giving me any more work. Again, these companies told them to shove it. I had my own copmpany and premises and did driving as and when I wanted and paid tax on the final figure at the end of the year, they didn’t like it but couldn’t actually do anything apart from huff, puff and threaten.
Find a LAW that says you can’t invoive an agency if you are not a ltd comapny. Do their window cleaners have to be ltd? If you did some building repairs to their property, would they be legally allowed to not pay you because you are not ltd?
It’s all down to one or two peoples interpretation and what they want to rules to mean!
DoYouMeanMe?:
I had the tax man give me crap over 20 yrs ago regarding driving on a S/E basis. It was, they said, a grey area. My answer was to sod off and come back when it’s black and white. I did very little through agencies, mostly direct with small hauliers and a couple of blue chip companies who could, if i had wanted, given me full time work. When they didn’t like my complete lack of respect for all the power they thought they had, they tried to put pressure on a couple of the companies I worked for and scare them into not giving me any more work. Again, these companies told them to shove it. I had my own copmpany and premises and did driving as and when I wanted and paid tax on the final figure at the end of the year, they didn’t like it but couldn’t actually do anything apart from huff, puff and threaten.
Find a LAW that says you can’t invoive an agency if you are not a ltd comapny. Do their window cleaners have to be ltd? If you did some building repairs to their property, would they be legally allowed to not pay you because you are not ltd?
It’s all down to one or two peoples interpretation and what they want to rules to mean!
