I am after some advice regarding Umbrella Compay Payments from the more experienced members of this forum… Reasonably new to HGV driving
Situation:
1st job: I got asked to do a driving job a fair distance from home. I explained the it was a long way away from home and the travel costs would be excessive. The Agency said that under the Umbrella PAYE Payment Scheme I could claim mileage. So I took the job on… On the understanding that it was the shift hours + travel to the job mileage. The job is straight forward 8x hours shift.
So I get my pay statement and there is no mileage expenses.
8x hours at £ 8.70 an hour…
£ 58.24 total income for tax purposes with no expenses paid
£ 18.78 for tax and NI (they have not taken the tax elements off yet but will do.
£ 39.46 as an after tax & NI balance
£ 32.00 fuel costs for about 140 miles round trip at approx 30mpg
£. 7.46 left after travel cost…
Now the agency insists I get mileage but no one can tell me a rate, but the umbrella company insists that you don’t get mileage, but can claim travel against tax due…
Sounds bonkers that after working an 8 hours shift with approx 4x hours traveling you are left with a daily take home pay of £ 7.46.
Now from my understanding PAYE = Wage + (Exes + Allowances that can be made tax free)
Where as self-employed = Gross income - less allowable outgoings and exes = net taxable amount of income on which tax liability is assessed on… (ie pre tax profit)
Now I have done a second shift and they have asked if I can do more… But I don’t want to do any more if I am only going to earn £ 7.46 after exes a day.
At this stage I am waiting for someone at the agency to talk to someone at the Umbrella company and then for someone to get back to me.
Is this correct or has someone got it wrong? It seems a lot of smoke and mirrors for what should be a simple situation…
Can anyone shed some light on how they are working?
And is this just one of those live and learn situations?
How much is the umbrella charging you to pay you this huge amount? You say you are Umbrella PAYE how’s that work? If you are just PAYE with the agency you can claim mileage of 45p per mile of which you get the tax back so 9p or if my sums are correct £12.60 for your 140 miles.
Thanks for getting back to me… On the point of '‘how’s that work.’
I really don’t know and can’t get any info as all the staff at the agency I have spoken to don’t seem to have a full grasp of how it works… I got told that Umbrella would be best as you get mileage, Umbrella also means you get paid a little more money but you don’t get time accrued holiday. But both systems work on paye
The agency want you to go umbrella so you lose your worker rights such as holiday pay, this also means that they can charge you for doing your wages for this they will offer you £1 per hour more but then say you can claim expenses tax free but what they forget to say is that you can claim these when working PAYE for an agency.
The umbrella thing is basically a rip-off. Let us assume I am eagerbeaver recruitment. I send you on an assignment with a client.
You travel 20 miles to the customers yard,so obviously a 40 mile daily drive to/from place of work. You drive the wagon for 8.5 hrs and for simplicity,take half an hour off for your break. I agree to pay you £10.00 per hour,so you get £80 per shift,for lets say 5 shifts Mon-Fri(40 hours total).
So your gross wage is £400. Let us assume for example the mileage payment is 50 pence per mile. 40 miles per day x5=200 miles@50p per hour=£100. On top of that,lets assume £10 per day meal allowance,so that’s another £50.
We then ‘seperate’ your pay,and call the mileage(£100) and meals(£50) non taxable pay. So out of your £400,you only get taxed on £250. You then find out that you are responsible for paying your own tax bill at the end of the year. You then find out that you are paying £10 per week for the umbrella scheme. Which you then find out is called ‘very eagerbeaver umbrella service’. In other words,you end up with the mither of an annual tax bill and I make an ‘extra load’ of money out of you.
Thanks mac12,you have pointed out the other bumming tool I forgot to post. You get no holididay pay either, which you will get normally. I think about 2.4 days per month.
Think of it this way,an umbrella is for keeping you dry or acting a ■■■ with. Nothing else-you have been warned.
eagerbeaver is right They tried to tell me Id only pay 12% doing it this way little do they know ive been self employed for 8 yrs Id get a shock doing a tax return at the end of the year Id O them
Last agency I worked for a few weeks ago this was the only way I could get paid and the Brolly company took 8% now thats taking the piddle , The agencies just dont want the hassle of PAYE etc, I now try and ask can I invoice the agency and ill do my Own accounts and they just need you UTR number if they say NO ,Its becuase they get a back hander from the umbrellas ,
If ,after reading these comments,you decide to go ahead with the old brolly dolly,just bear in mind that HMRC are onto these ‘companies’ and if any ‘exagerations’ or 'overallowance’s have occurred, you are also potentially open to prosecution if it is found the ‘mistakes’ in your accounts are deliberate.
Oh…and you will also get hit with extra tax required,based on any ‘mistakes’.
45ppm for first 10k thereafter 20ppm if on mileage scheme or you could be claiming. Fuel costs and servicing this normally done if you have company van there for the is a company vehicle. It’s doesn’t usually apply to a car as you’ll get battered by company car tax for private use. Are you on an umbrella scheme or are you set up as ltd and managed services. You need to find out as you are running the business this is what many agency drivers forget go se and you’ll be running a business in the eyes of hmrc
you should have not incurred any tax or ni because you are below the threshold, so apart from the margin fee charged by the umbrella you should have taken the rest without any tax.
Thanks for the advice… I have already gone over the tax threshold for this tax year due to previous employed work…
I have raised this mileage issue with the agency a week ago now and I am still awaiting a response even though I have been chasing an answer. The sad thing is they have ask if I do more shifts for their client because they liked my professional attitude. But I have been force to turn them down until this issue is cleared up because it is not financially viable as things stand…
Just tell them straight you have other activities so you don’t need to go the umbrella route seams a lot of agencies railroad drivers into these schemes
