Hi,
Been looking through various agency vacancies and alot keep saying “wages paid through our umbrella scheme”.
What is an umbrella scheme and how does it work?
Regards,
Richard.
They are 3rd party bookkeeping companies who manage your payments from the agy and handle your tax affairs as a self employed driver with HMRC. By doing this the agy negate the need to pay you the benefits of being an employed driver on PAYE.
By doing the 3rd party work they charge you between £10-£20 +vat per transaction (ie: per week).
You need to know exactly what they’re doing for the fee. So Unless you really know what your getting into by going down this route… I’d avoid.
There are various views on this forum about such companies from both ends of the spectrum.
If you are serious about working for the agys long term, you’d be better off doing your own bookkeeping for a fraction of the cost. Most teenagers can handle a spread sheet on a home computer which is all about you need to keep records
More criminal activity from the agencies, you can do your own tax and NI contributions for a fraction of the cost the agencies only promote this method because they get a kickback from these goons.
If you must line the pockets of these slimeballs just invoice them and sort the rest out yourself.
Umbrella schemes are a fiddle. It’s like giving a guy standing outside a betting shop £12 out of which he’ll pop into the shop and put a £10 bet on “for you”, as you’re too intimidated to do it for yourself.
Win or lose in the actual thing you intend, you’re handing over money for very little.
Umbrella firms around here charge around £27 to process each pay slip. That means of course, if you only get one shift a week (you might only WANT one shift a week!) then coughing up £27 “for nothing” out of a single day’s pay is clearly obvious as a ■■■■-take.
There’s also no holiday pay (although they might build a pot out of a deduction from your pay)
There’s also huge problems with HMRC if the umbrella/agency deduct tax from you, but for any reason don’t pass it on to HMRC as they should at the end of the tax year. Basically, if the firm goes ■■■■-up, all that tax you had deducted (and you thought you’d already paid!) goes ■■■■ up with it, and HMRC will bill you again for the same amount, as they didn’t get it the first time. 
Even if they don’t go ■■■■ up, you’re still effectively giving them an interest-free loan of all the tax you paid for them to hold in the meantime! 
If you work for such a firm, and the work dries up for a few weeks in January (as happens with agency work everywhere) then you’ll also find being Self-Employed means you can’t sign on. That means paying stamp for yourself during those weeks you didn’t actually get paid. Woe betide you if the umbrella pays your stamp, gives you a negative pay slip, and bills you the £27 for it as well!
“Gis ten pee for a cuppa tea mate” - and you give him a tenner for some drugs. You’re £17 better off with THAT deal, compared with Umbrella, so don’t make the mistake in the first instance! 
You only get tax incentives for those things you provide receipts for not to mention that you can get this on PAYE with a proper honest agency in the first place. Should the umbrella firm be over-zealous in claiming expenses on your behalf, then you also may face a tax demand come later when it turns out you didn’t provide any receipts… 
Some agencies refuse to take you on unless you join the umbrella. This is no different of course from applying for a bank loan and getting told you “Must have PPI with the loan” … This is one of the current banking scandals. Problem is here, Banks are in the public eye, but few among the general public give a toss about us drivers, so if we all get systemically fiddled, no one gives a ■■■■ unfortunately. My guess is Umbrella schemes are here to stay. 
Your only defence is to keep on walking until you find an honest agency, and ask straight out “Do you do PAYE?” when about to sign up with one.
Make sure it IS PAYE and not “Pseudo PAYE” which is the same as umbrella… Another lie from another bent firm. There’s plenty of liars and bent firms out there from what I read on these forums, so I must be real struck to have ended up with a straight one after only 9 tries… 
If the agency bod looks at you as if you asked “Do you do ■■■■ and Facials?” then you should not even be breaking stride (you can break wind though if you like! ) … Just keep on walking. There’s plenty more agencies out there. I’d say the medium sized driver specialist ones are best. Too small, and they won’t have any work. Too big, and they’ll almost always have some kind of payslip looting scheme such as umbrella. 