Hey guys
Need some wisdom please, i drive for an agency on PAYE weekly which is my prefered method of payment.
I have now been offered a better paying job by another agency but they only pay either self employed or thru an umberlla company, what is an umbrella company and what does it involve? i dont really want to have to keep receipts and do accounts for another £1 an hour.
In the long run would rather have my stamp paid properly so my pension pot is going up…
Obvs the rate is better cos they have no overheads but is it worth my while taking this job with this payment method?
Cheers…
Sent from my GT-N7105 using Tapatalk
If they are only offering 1 quid an hour over your PAYE job, you’ll be worse off if you take it! 
a short answer is avoid umbrella at all costs
That is what i thought, how does umbrella actually work, is it offshore paying 2% tax or something like that■■?
Sent from my GT-N7105 using Tapatalk
Short answer, no it isn’t worth it.
Brolly companies are not the most efficient method for decreasing your tax bill. Limited company status is a much better road to go down but, you need to set up your company and run it in accordance with HMRC rules, sort out accountants, business bank accounts etc. It really isn’t something you should consider over a bacon sarnie in a lay-by.
The agencies have sold the brolly scheme over the last decade or so with no real thought for it’s legitimacy and certainly not for it’s tax effeciency in comparison to ltd companies. It’s convenient for them because it releases them from payroll responsibilites, holiday pay and NI contributions. They only do it to further their own profits.
There have been reports and a thread or two here I believe, of HMRC recently looking to get large amounts of what they consider unpaid tax back from one man bands operating under brolly schemes.
If an agency is trying to sell you something, you can be sure it’s all about their own profit.
Tony Res:
That is what i thought, how does umbrella actually work, is it offshore paying 2% tax or something like that■■?
Sent from my GT-N7105 using Tapatalk
below is a short summary of a situation i have read up somewhere:
trucker pays an umbrella company to do his tax. umbrella has no responsibility and uses all legal and not so legal ways to reduce tax (like claiming 500 miles travel everyday to work), the tax has never actually been paid by umbrella (read - ■■■ stolen by the umbrella CEO). Trucker now in court with HMRC and the said umbrella protesting his tax bill of around £15K
I left my last agent due to them wanting to stop PAYE…and do an umbrella scheme…so I moved to a one who did,in fact they have been taking folks off umbrella for a while.
You need about £2.85per hour more to start making being paid via umbrella worthwhile.
Bear that in mind when you ask them “what the self-employed premium is”. Chances are, there are still plenty of jokers out there who think they can reel punters in with the standard "You get a whole shiny pound per hour extra on umbrella with us - by way of incentive!"
It’s not worth the loss of Holiday pay alone - let alone Sick pay, paying the agency’s stamp for them, and the need to probably get some serious personal liability insurance set up. 
You should be setting the rate not the agency if self employed if your paye why change for £1 an hour more it really won’t be worth it. 2.28 per hour more sorry more like at least £5 per hour more to actually make it worth while. As for insurance they’ll make you take a driver damage waver insurance it’ll sound good untill you need to make a claim . They’ll tell you its a legal requirement its not the same goes for public liability but pl would be and idea. As for employers liability this also isn’t required unless you have someone working for you even if there a subcontractor you’ll need it only then
Umbrella companies make the task of robbing you look easy
They make the majority of Agencies look like they are run by Saints (not the haulage firm)
After a year of being “self - employed” I am going back to PAYE. Now it simply is not worth it since losing meal & mileage allowances. Also as a “Ltd Company” after passing the £8060 (approx) barrier I have started to pay both employers aswell as employees Nat Ins Contributions! This is simply not cricket! My place of work pays approx £1.50ph more to “self - employed” than PAYE. After taking financial advice PAYE is the way to go. Like Winseer states you would require approx £3 ph more to make it a viable propersition now.
The mileage allowence was only 45ppm for the first 10k anyway I came off mileage a few years ago and only do claim fuel and maintenance works out much better
Thanks for your replys guys, i will stick where i am for now until a better payin paye job comes up…
Sent from my GT-N7105 using Tapatalk
Worth a read.
HMRC obviously (quite rightly) have sand in their ■■■■■■ over these schemes. Nice to see that if the driver is skint they intend to chase the Company Directors running the schemes.
gov.uk/government/publicati … tributions
Tony Res:
That is what i thought, how does umbrella actually work, is it offshore paying 2% tax or something like that■■?
Sent from my GT-N7105 using Tapatalk
Briefly (and before anyone starts, this is a gross over-simplification just to keep it easy to understand):
Under PAYE the agency pays you £10 an hour and addition to that, it also has to pay Employer NI (about £1.40) and make some provision for holiday pay. Out of that £10 an hour, you have to pay Income Tax and NI.
Under an umbrella scheme, the agency pays a higher rate of £11 an hour to the umbrella company, but doesn’t have to pay Employer NI or make provision for holiday pay. You have your own limited company (I’ll call it TonyRes Ltd, arranged and managed by the umbrella company) operating “under the umbrella”. The agency is happy with this as they are saving themselves 40p by not paying Employer NI, and quite a bit more by not having to cover holiday pay. TonyRes Ltd gets the £11 an hour and, after deduction of legitimate business expenses pays corporation tax at 20% on the remainder. You will in theory be “employed” by TonyRes Ltd and will be paid a small salary just sufficient to keep your NI contributions in credit but not enough to pay Income Tax (this salary will form part of the “business expenses” mentioned earlier - there will also be a £25 quid or so a week management fee paid to the umbrella company). The remainder of TonyRes Ltd’s profits will be paid to you in the form of a shareholder dividend, the first £5k a year of which is tax free, the remainder being subject to 7.5% tax (or 32.5% if you are a higher rate taxpayer).
The idea is for TonyRes Ltd to pay as much as possible to you as reimbursement of “expenses” (e.g. mileage for travelling to client site, parking etc) rather than as profit/dividend in order to avoid paying tax and NI.
Thank you very much for that explaination Roymondo, now i understand what most of it is about.
Expenses?
Mileage: if i am riding a car or motorcycle and the job is only 5 miles each way with free parking that is not going to amount to much.
Food/lunch: I thought i read recently that HMRC dont allow food claims anymore as they say you eat anyway working or not?
If you are not staying out at night and i guess that would be down to the firm anyway and once you have your boots/vest/gloves what other expenses can you claim? there are no materials or tools like a lot of self employed expenses…
Sent from my GT-N7105 using Tapatalk
I think the answer is that in those circumstances you are indeed not really running as self-employed or limited company. If you were, you’d have office and administration costs and maybe capital ■■■■■■■ (with associated depreciation on assets).
Sent using smoke and mirrors
The law was changed in april this year. Mobile workers can no longer claim travel or food allowance. Its not worth it anymore just stick PAYE.