Just a mention really folks. My wife is a school teacher who is retired, but she likes to still work and opted for an agency, this agency doesn’t have a payroll dept and put her onto an umbrella scheme ( orange genie ), she has complained a few times about the stoppages, but to no avail…upon reading one of her wage slips from online, She is not liable for NI as she draws a pension, but tax has to be deducted, but she is having to pay her employers NI and upon reading different posts ( not on here ) this seems a normal practice, albeit it being illegal. It turns out that the umbrella can only deduct, what the agency sends to them, and it seems as though they’re not sending enough to cover the extra deductions, agency margin ( fee ) etc, so what can we do. If she complains to the agency, that they need to send more money, or pay a much higher rate, then she will be offered no more work, if she threatens the umbrella with legal action, the same thing will happen, ok she would get the employers Ni refunded IMO…but will be blacklisted amongst the agencies.
I believe that the government is against this practice, but we cannot complain to a body that isn’t making this an illegal practice or fails to act on it, as I said before, she would have to give her details, and once again be possibly be blacklisted… I wonder what are your thoughts. BTW, I have contacted my local MP, but once again she is asking for permission from my wife to act, and obviously wants details.
What they should be doing is phoning the umbrella and asking if they are deducting employers NI from an employees wages !!
I’d get your…
Wife to look for another way to teach that involves going PAYE. In the short term she’ll have no income but in the long term she’ll be saving a packet when HMRC (despite them knowing brolly firms operate on the wrong side of things) will still want any shortfall owed to them plus the interest. They won’t negotiate or cut you a deal, they’ll want it all in one go.
Brolly companies and schemes should NOT be used under any circumstances.
Your MP is too busy fudging Brexit at the moment to give a toss about anything else that lands in her intray.
truckyboy:
J It turns out that the umbrella can only deduct, what the agency sends to them, and it seems as though they’re not sending enough to cover the extra deductions, agency margin ( fee ) etc, so what can we do.
She agreed the rate with the agency, should have done the maths. There’s thousands upon thousands of posts from lots of people saying the extra quid or two an hour over PAYE rates doesn’t come close to covering the costs.
What they should be doing is phoning the umbrella and asking if they are deducting employers NI from an employees wages !!
But she isn’t an employee. Nothing illegal with that as you’re self employed and they are acting as a wage processor so someone has to pay the employers NI and as you are your own employer it is you. I’ll tell you something else too that’ll get you even more enraged - guess where holiday pay comes from? Yep, that’s right, the hourly rate the agency pay.
Conor pretty much summed it up.
Tbh I think agencies should offer PAYE. You speak to some of these agency snakes and so much crap comes out their mouth when they start talking about the benefits of umbrella it’s unreal.
adam277:
Tbh I think agencies should offer PAYE.
Both agencies…
That I now work for when I first approached them, insisted I use umbrella companies ‘there’s no way we can use you unless you go through our umbrella scheme’. I insisted that it would be PAYE or I wouldn’t sign up.
I work PAYE for both of them.
Get 'em told.
First point - although your Mrs may not be paying employee NI if she has reached state retirement age (note - not just drawing a pension but actually having reached her state retirement age), employer NI contributions are still payable.
Secondly, responsibility for paying employer NI falls to her individual company, not the outfit she is working for, not the agency and not the umbrella company. It’s just another expense that has to come out of her company’s top line.
I’m sure that agencies can’t really blacklist you for complaining about being on an umbrella scheme, we get told there is a shortage of teachers, so surely there are other agencies who’d pay PAYE, as there are other Driver agencies who pay PAYE, who have to fill their obligations to provide staff and would be happy to get experienced staff from another agency.
Personally either go PAYE, or ditch the Umbrella company and go properly self employed, get your own accountant to sort out what’s payable to HMRC, pay it yourself, so you know it’s done and set your rate to cover it and I’d bet she’d still get the work.
I’m an I.T. consultant and used Orange Genie for a very short period of time.
At one point they were trying to take more of my wage packet than they were giving me.
There are plenty of other umbrella companies out there, Google is your friend.
If the agency will only deal with OG, question how much of a backhander they are taking for pushing you to OG.
DadsRetired:
There are plenty of other umbrella companies out there, Google is your friend.
I agree…
There are plenty of robbing two faced money grubbing twister brolly firms out there. Google is indeed your friend, you can use it to find a proper accountant.
On your point about NI: You say “She is not liable for NI as she draws a pension”, but that may not be true. NI is payable until she reaches State pension age (65?) and as a teacher, she may well have retired on her Council pension before that.
yourhavingalarf:
DadsRetired:
There are plenty of other umbrella companies out there, Google is your friend.I agree…
There are plenty of robbing two faced money grubbing twister brolly firms out there. Google is indeed your friend, you can use it to find a proper accountant.
Or a proper job.
Santa:
On your point about NI: You say “She is not liable for NI as she draws a pension”, but that may not be true. NI is payable until she reaches State pension age (65?) and as a teacher, she may well have retired on her Council pension before that.
The OP mentions only Employer NI contributions being deducted - they still have to be paid even if the employee is over state pension age, so not paying Employee NI contributions.
Hi guys/gals, your replies are very sensible but i just want to clear a couple of things up.
My wife is past retirement age, and all retirees who still want to work, part time or full time, will not have to continue paying N.I. But they are still liable for Income tax, and depending on what you earn, your pension can and will be added to your earnings annually, and taxed as a whole income.
My wife had never worked for an agency before, and therefore could not have known that she would be put under an umbrella company, she did the interviews, documents and police checks etc, and after that it was jobs via text, and wages via internet…like i said , she is having to pay EMPLOYERS contributions…which is illegal, but is stated on her wage slip …and yes she does pay Tax, and the umbrella fees ( known as margins )
and the reason for the post was to highlight, the problem and hopefully seek answers as to whether other people under umbrella is also paying their employers NI.
We have now contacted our local MP, who is doing some research of her own.
Btw, her agency who gives her the work, doesnt offer PAYE, Self employed, limited or anything else, but merely passes everyone else onto an umbrella…( so easy eh ! )…but this agency supplies all of her work, so stirring up the mess, may give them cause to stop giving her work…but hey ho…as for shortage of teachers…after being interviewed for around 6 agencies, its only one who bothers,unless theyre in league with each other…
and as previously mentioned, her agency should be taking into account what other stoppages would be taken apart from the usual and fees…not employers NI, as thats their problem…BUT, THEY still have to pay Employers NI, even if my wife is exempt from N.I. as an employee.
I think she needs to do something else altogether. I thought teaching was supposed to be a hard stressful job, undervalued with mega long hours.
Maybe she could get a HGV licence??
Seriously, there must be something else she can fill her time with. This agency/umbrella lark seems too much bother.
I retire next year, and I plan to do more fell walking, fishing, painting, woodworking, cycling and fettling/driving my old sports car.
Think. theres plenty to do. I cant wait!
truckyboy:
Hi guys/gals, your replies are very sensible but i just want to clear a couple of things up.
My wife is past retirement age, and all retirees who still want to work, part time or full time, will not have to continue paying N.I. But they are still liable for Income tax, and depending on what you earn, your pension can and will be added to your earnings annually, and taxed as a whole income.My wife had never worked for an agency before, and therefore could not have known that she would be put under an umbrella company, she did the interviews, documents and police checks etc, and after that it was jobs via text, and wages via internet…like i said , she is having to pay EMPLOYERS contributions…which is illegal, but is stated on her wage slip …and yes she does pay Tax, and the umbrella fees ( known as margins )
and the reason for the post was to highlight, the problem and hopefully seek answers as to whether other people under umbrella is also paying their employers NI.
We have now contacted our local MP, who is doing some research of her own.Btw, her agency who gives her the work, doesnt offer PAYE, Self employed, limited or anything else, but merely passes everyone else onto an umbrella…( so easy eh ! )…but this agency supplies all of her work, so stirring up the mess, may give them cause to stop giving her work…but hey ho…as for shortage of teachers…after being interviewed for around 6 agencies, its only one who bothers,unless theyre in league with each other…
and as previously mentioned, her agency should be taking into account what other stoppages would be taken apart from the usual and fees…not employers NI, as thats their problem…BUT, THEY still have to pay Employers NI, even if my wife is exempt from N.I. as an employee.
I’m sorry mate, but this is wilful ignorance. It is NOT illegal to require her (or rather, her company) to pay employer NI contributions. Did I say “her company”? Yes, I did - that’s how these umbrella schemes work. In essence, the agency worker has his/her own limited company which operates under the “umbrella” scheme, with the sole intention of exploiting the tax rules to minimise their own tax bill. Income from her clients (i.e. the schools she works for) is channelled through the umbrella company so that her exposure to income tax can be minimised. If your wife hasn’t fully understood the nature of the deal she has entered into, then to put it bluntly, more fool her.
Roymondo:
truckyboy:
Hi guys/gals, your replies are very sensible but i just want to clear a couple of things up.
My wife is past retirement age, and all retirees who still want to work, part time or full time, will not have to continue paying N.I. But they are still liable for Income tax, and depending on what you earn, your pension can and will be added to your earnings annually, and taxed as a whole income.My wife had never worked for an agency before, and therefore could not have known that she would be put under an umbrella company, she did the interviews, documents and police checks etc, and after that it was jobs via text, and wages via internet…like i said , she is having to pay EMPLOYERS contributions…which is illegal, but is stated on her wage slip …and yes she does pay Tax, and the umbrella fees ( known as margins )
and the reason for the post was to highlight, the problem and hopefully seek answers as to whether other people under umbrella is also paying their employers NI.
We have now contacted our local MP, who is doing some research of her own.Btw, her agency who gives her the work, doesnt offer PAYE, Self employed, limited or anything else, but merely passes everyone else onto an umbrella…( so easy eh ! )…but this agency supplies all of her work, so stirring up the mess, may give them cause to stop giving her work…but hey ho…as for shortage of teachers…after being interviewed for around 6 agencies, its only one who bothers,unless theyre in league with each other…
and as previously mentioned, her agency should be taking into account what other stoppages would be taken apart from the usual and fees…not employers NI, as thats their problem…BUT, THEY still have to pay Employers NI, even if my wife is exempt from N.I. as an employee.I’m sorry mate, but this is wilful ignorance. It is NOT illegal to require her (or rather, her company) to pay employer NI contributions. Did I say “her company”? Yes, I did - that’s how these umbrella schemes work. In essence, the agency worker has his/her own limited company which operates under the “umbrella” scheme, with the sole intention of exploiting the tax rules to minimise their own tax bill. Income from her clients (i.e. the schools she works for) is channelled through the umbrella company so that her exposure to income tax can be minimised. If your wife hasn’t fully understood the nature of the deal she has entered into, then to put it bluntly, more fool her.
Harsh, but true.
Umbrella companies are scum and have been the bain of industry for years
From what I have read, she is an employee of the umbrella company…the agency she works for supplies her with work. They are the ones receiving the money from the schools, and then pass it on to the umbrella company to act as her accountant so to speak, my understanding is that the agency is not her employer, but the umbrella is, it states that what they are doing is, in fact, Illegal to make her pay an employer’s NI, its the same as working for an employer, and all the drivers contribute towards their NI, which doesnt happen does it. I see an umbrella as accountants, as she also pays a fee to them for their services.
quotes:
What is an umbrella company?
Umbrella companies are businesses that take on agency workers and other types of temporary workers as their
own employees with continuous contracts of employment. Their sole purpose is to employ people like you (often
called ‘contractors’). To meet the rules to be a ‘continuous’ employment, the umbrella company must usually pay
you for 336 hours of work per year at the minimum wage.
TIP: If you have been employed by an umbrella company for more than a year, ask them if any of the 336 hours remain unpaid.
quotes:
Why have I been told to use an umbrella company?
Historically, if you found work through an agency, they would normally deal with your pay themselves. However
these days, agencies prefer not to do this as it saves them time and money and means they can concentrate on
matching workers with available work. As such, they usually suggest that people use an umbrella company. It isn’t
against the law for them to do this, although when they pass you over to an umbrella company they should make
sure they also hand over sufficient funds to cover all the employment costs that the umbrella company will now
have. This should include an amount to cover the umbrella company charge (more on this later).
Because the umbrella company becomes your employer, they will deal with your pay and other employer
obligations instead of the agency. This includes paying you your wages with tax and National Insurance (NIC)
deducted as required by the Pay As You Earn (PAYE) system.
TIP: If you feel very strongly that you want to be paid by the agency and not an umbrella company then you
should try talking to the agency. However you should be aware that not all agencies run PAYE schemes themselves anymore.
Why have I been told to use an umbrella company?
Historically, if you found work through an agency, they would normally deal with your pay themselves. However
these days, agencies prefer not to do this as it saves them time and money and means they can concentrate on
matching workers with available work. As such, they usually suggest that people use an umbrella company. It isn’t
against the law for them to do this, although when they pass you over to an umbrella company they should make
sure they also hand over sufficient funds to cover all the employment costs that the umbrella company will now
have. This should include an amount to cover the umbrella company charge (more on this later).
Because the umbrella company becomes your employer, they will deal with your pay and other employer
obligations instead of the agency. This includes paying you your wages with tax and National Insurance (NIC)
deducted as required by the Pay As You Earn (PAYE) system.
TIP: If you feel very strongly that you want to be paid by the agency and not an umbrella company then you
should try talking to the agency. However you should be aware that not all agencies run PAYE schemes themselves anymore.
continued…
quotes:
Section 7 of HMRC guidance published online in March 2017 states the following concerning NI payments: ‘They [the fee payer] cannot lawfully deduct the secondary NICs from a fee that has been agreed, but could, depending on the contractual terms, negotiate a lower fee [with the intermediary].’
This appears to simultaneously prohibit unlawful NI deductions while providing recruiters with an opportunity to circumvent the rule. In truth, HMRC intended the first part of the sentence to apply to fee payers negotiating new contracts with contractors.
The freedom to renegotiate a lower fee was only supposed to apply to existing contracts when the Off-Payroll rules came into play, with this stipulation providing fee payers with the chance to alleviate unforeseen employer’s NI costs. However, a lack of clarification from HMRC appears to have caused unlawful activity on a broad scale.
Potentially unlawful practices among certain recruiters and umbrella companies, in response to the public sector IR35 reforms, have left many contractors unjustly funding the tax obligations of their recruiters and clients, including employer’s national insurance (NI) contributions.
Since the April 2017 legislative changes, recruiters have increasingly been encouraging contractors to work through umbrella companies. Many of these recruiters are deceptively advertising contracts to contractors at the rate that they pay the umbrella company.
While the contractor rightly expects to receive the quoted rate, the employment costs, including employer’s NI, must first be funded from the sum paid to the umbrella, leaving the contractor far short of their expected income. This could be construed as a legal misrepresentation, rendering the consequent deduction of the client’s or recruiter’s employment costs unlawful.
Umbrella is useless since they changed the rules on travel.
Paye or ltd is best but only ltd if your earning enough to save enough tax for ltd
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