Umbrella scheme - is it worth it?

UK PROFESSIONAL DRIVERS FORUMS THE UK PROFESSIONAL DRIVERS FORUM (INTERACTIVE)
1

Right, I’ve been to see an agency today, with a view to starting work for them in the next couple of weeks. They’ve suggested I go through an umbrella payment scheme, but is it worth it? I’ve had a look on the company (their suggestion) and put some figures into their calculator, and I honestly can’t see that its worth it.
The work is C1 working for the NHS, £7 p/h, 8hrs a day, travelling to work and back, the mileage works out at 300mls per week, at an allowance of 45p per mile, and meal allowance at £7 per day. After putting the figures into their calculator, with their fee of roughly 10%, the take home pay on a basic 40hr week, isn’t (to me anyway) too good. There is no mention of any expenses reimbursed or offset, with the take home being £208, does this sound correct?

Anyway, a screenshot of the calculations…

The bit I dont understand is the expenses, its 30mls to work and then same again home, going to be a good £10 fuel a day, yet no mention in the calculations of any reimbursement, or offset or is that not how it works? Can anyone explain how it works, am I reading it wrong?

2

No. It’s a con.

3

Hi there SuffolkLad,

I’ve just come up with the same results as you, based on your figures.

Not sure how they can deduct Employers’ NI from YOUR £7.00/hr, as if you were an employee, this is a cost to the employer on top of your wages.

At £239.00/wk salary with holiday pay, looks like you would be grossing £5.97/hr (below minimum wage) and only taking home £5.20/hr.

Is that worth it to you for the job?

ETA: It looks like the calculator is not adding on the £116.67/pw for the mileage (300 miles/wk for 48 wks/yr (assuming 4 weeks annual leave) = 14,400 business miles claimed), which would take the take home up to £324.67. The 5 days meal allowance at £7.00/shift adds a further £35.00 so take home increases to £359.67. Therefore hourly rate (net) calculates to £8.99/hr. Gross salary on these figures should be £404.17, or £10.10/hr.

However, the above seem unlikely somehow, so think you’d best speak to someone there, rather than rely on an online calculator!

4

I have been retired now since 1998 and never done any agency work.
Could you please explain to me what “Umberella scheme” means and how it differs from other pay schemes.
You don’t need to worry about me trying to go back on the road, I am just inquiring. The medics took away my HGV licence years ago and from what I read about the industry today it is knackered compared to my days on the road.

Russell.

5

that’s a load of [zb]
the tax they take is more than it should be, so the 10% fee is for what exactly?
tell them to go [zb] themselves.
who owns the umbrella company? the same director of the agency perhaps?

6

I do Maddison Group.co.uk
Dont like it much like Agency Work,but it works.
got few Month ago some Money from Tax Office back

7

nvHerman:
Hi there SuffolkLad,

I’ve just come up with the same results as you, based on your figures.

Not sure how they can deduct Employers’ NI from YOUR £7.00/hr, as if you were an employee, this is a cost to the employer on top of your wages.

At £239.00/wk salary with holiday pay, looks like you would be grossing £5.97/hr (below minimum wage) and only taking home £5.20/hr.

Is that worth it to you for the job?

ETA: It looks like the calculator is not adding on the £116.67/pw for the mileage (300 miles/wk for 48 wks/yr (assuming 4 weeks annual leave) = 14,400 business miles claimed), which would take the take home up to £324.67. The 5 days meal allowance at £7.00/shift adds a further £35.00 so take home increases to £359.67. Therefore hourly rate (net) calculates to £8.99/hr. Gross salary on these figures should be £404.17, or £10.10/hr.

However, the above seem unlikely somehow, so think you’d best speak to someone there, rather than rely on an online calculator!

Thanks for that, think I need to be having a word with the agency, incidentally they’re DriveLink Network, umbrella company is JSA Group.

Chances of getting that hourly rate for C1■■? :smiley: :smiley: :laughing:

8

No worries.

Chances of getting that rate for C1? Slim to none I’d say, but then my opinion on that is worth as much as their online calculator!!

9

My 1st thought when I saw the calculations was, stuff it, having done some digging online and found a paye calc, I’d be better off going Paye. Then I had a look at some other umbrella companies, and the picture is looking a bit better.

Thats better, will speak with them tomorrow, and if all is as good as it seems there, then it does seem worth it, even more so if I manage to get some overtime in as well.

10

this is what you pay without taking any expenses into account. PAYE

annual monthly weekly
Gross Pay £14,560.00 £1,213.33 £280.00
Tax Free Allowances £7,475.00 £622.92 £143.75
Total Taxable £7,085.00 £590.42 £136.25
Tax Due £1,417.00 £118.08 £27.25
National Insurance £879.84 £73.32 £16.92
Total Deductions £2,296.84 £191.40 £44.17
Net Earnings £12,263.16 £1,021.93 £235.83
Employers NI £1,033.34 £86.11 £19.87
Net Change from 2010 +£292.56 +£24.38 +£5.63

this is what you pay with expenses taken into account. PAYE

Gross Pay £5,720.00 £476.67 £110.00 (mileage allowance, and meal allowance deducted)
Tax Free Allowances £7,475.00 £622.92 £143.75
Total Taxable £0.00 £0.00 £0.00
Tax Due £0.00 £0.00 £0.00
National Insurance £0.00 £0.00 £0.00
Total Deductions £0.00 £0.00 £0.00
Net Earnings £5,720.00 £476.67 £110.00 (plus mileage allowance, and meal allowance)
Employers NI £0.00 £0.00 £0.00
Net Change from 2010

11

ITS A CON
You dont get 45p per mile for travel, its 45p of what you already earned is tax free and your paying £1430 for the privalige.
If you setup a LTD company, you would take home at least another £2000 per year on £14560 plus an extra £1 per hour.

12

SuffolkLad:
…Then I had a look at some other umbrella companies, and the picture is looking a bit better…

It’s absolute Horlicks. I’ve just had a play with that calculator and I would end up paying £0.00 Income Tax. :confused: I’m on BR before I get out of bed ffs! Not to mention a tenner a week short on NI.
Come to think of it, the more I play with it the more outrageous the figures become. :unamused:

13

You dont actually get the 45p a mile, its offset aginst your tax so in reality you see about 9p a mile. Because you get this you cannot claim petrol money or depreciation/ wear and tear on your car either.

14

No, invoice and do your own tax return, mine takes me an hour tops.

15

These are a con. Radio 4 Moneybox has done a programme explaining how bad they are.

Short answer is write to your tax office, and tell them you are going self-employed as a sole trader.

Set up a bank account into which you pay your earnings and nothing else (that way you can easily calculate your annual earnings).

Keep a note of all your business miles (driving to your places of work and back). You can claim this at 45p p m against your earnings (you don’t get 45 p p m, but the sum is effectively added on to the amount you earn before you have to start paying income tax.

Keep all receipts for anything you buy which is for work: this can include parking, food and drinks purchased when you are on the road, hotel if you are out overnight, road transport magazines, maps, sat nav, mobile phone and the bill for its business use, training, PPE.

At the end of the financial year you can add all this up, and the total is added to the amount you can earn without paying tax.

You put these figures on the self-assessment form that the Tax Office send you: it’s not too difficult to fill in, and if you phone them they will help you if you get stuck

You will pay NI at a lower rate via direct debit, and you are sent an annual tax statement, which you have to pay off in two instalments.

You don’t pay tax in the first year, but you need to put money by, because they then charge you for your first and second years.

If you put aside one-third of what you earn after your expenses then you will have more than enough to pay the tax man.

16

It’s amazing how many of these “umbrella” schemes are springing up. A lot of them seem to be mainly aimed at the construction industry and a quick scan though some websites shows that the quality can vary widely; especially in the areas of speed of payments and charges.

Apparently anyone at all can set one of these companies up as they are entirely unregulated, so don’t look to the FSA for help if the directors beggar off to foreign parts with your cash in their back pockets.

It also seems that there is a kind of Dutch Auction going on, where they try to offer better terms and allowances than their competition. Clearly, you should avoid recent start-ups and the ones offering unbelievable deals.

It strikes me that if you are capable of working out what they should be paying you for the hours you worked, then you are capable of setting up as a limited company and keeping it under your control. You can even set the hours you work at accounting against your costs.

17

You pay the £27 to get a rebate that you could get for free by phoning HMRC and setting it up.

Income tax rebates, working tax & child tax credits can all be done this way. You just update them with your wage figures, stating the gross for tax (ie your gross less your milage that you get anyway without paying £27!!) and the HMRC will do the rest.

I’d say that HMRC has never been better for dealing with by the working public! :slight_smile:

Umbrella is like being collared by a guy outside a betting shop who offers the service of “putting your bet on for you” for a fiver… What’s wrong with walking to the till, and filling out the betting slip yourself? - Ah, you’re a newbie a bit intimidated by the process of slip-filling and actually going INTO the shop! :open_mouth:

How many just pay the fiver for a quiet life…

I recall hanging around amusement arcades when I was about 10yo at Butlins in the 1970’s, showing punters how to do the nudges, etc. in the hope of getting tips from the grateful “I might ■■ up this unlimited nudge” crowd who were grateful for your assistance (usually paid in tokens!) :slight_smile:

How I got from that, to being a hairy-arsed trucker I don’t know… :open_mouth:

18

Driver Hire Umbrella say tje charge is taken from the hire fee, with no charbe to the employee. Does that mean in reality, the hourly rate is a bit less than normal?