I’ve worked agency before, but always paye. what is an umbrella company? it seems that you have to join one or you get no work. is it similar to being self employed? what are the pitfalls? they just told me that I get paid a higher rate if I join.
I was just about to ask the same. I hope some one can explain. 
it seems that now if you want to work for an agency you HAVE to do it through an umbrella company.
you get paid a higher rate which makes it seem the better option anyway, but I have read that you are responsible for your own tax ni etc which could lead to problems if you ever need to claim benefits. I’m just hoping someone can explain what an umbrella company is, how it all works and whether or not it is a good idea.
I had this agency call me yesterday with the offer of work. She said it’s paid through the umbrella scheme and when I asked her how it works and whether I would have to sort my own tax and NI out she had no idea. Sounds a bit dodgy to me, rather been on paye!
Umbrella is a device that will protect you from the rain, if u have to get out of yer cab for whatever reason.
It has to rain for it to take visual effect tho.
Apologies for a verbal diarrhea.
thank you Dan, glad you cleared that up for us.
Sammy, I really don’t know what advice to give you, I’m only hoping someone who has experience of one of those schemes can give us some advice.
if the agency themselves have no idea how it works, why are they pushing people onto this bloody system.
jbaz73:
I’ve worked agency before, but always paye. what is an umbrella company? it seems that you have to join one or you get no work. is it similar to being self employed? what are the pitfalls? they just told me that I get paid a higher rate if I join.
Did they say what the higher rate would be and how much they would charge you to be in there umbrella company
they pay 9.50 per hr if you choose umbrella, they won’t even tell you paye, I’m of the opinion its umbrella or no work.
try this link.
contractorumbrella.com/how_i … lated.html
Not sure if its correct but maybe it will be of some use to you.
Some more info on Wiki.
en.wikipedia.org/wiki/Umbrella_company
I think umbrella makes it easier to do expenses, i’m no accountant tho.
thanks for the info 
I have to admit that it seems to be a pretty good deal. work for the agency, get paid a higher rate through an accountancy company who take a percentage, but you can claim expenses eg workwear, petrol, meal allowance, expenses such as night out parking, if you need to buy a map…
so why do folk tell me to avoid them if I can? I’ve got a few months to dig into it before I have to make a decision.
You pay the unbrella company to sort out your tax & NI they take there cut before they pay you
the agency already do that… so its kind of like an agency within an agency? I guess its all down to what cut they take, the job I looked at was 9.50 ph, so if they take 15% then I’m looking at losing around 1.40 per hour leaving my true rate at 8.10 ph. which is about the going rate around here for class 2
why do they have to keep making things more complicated and tying us up in red tape?
jbaz73:
the agency already do that… so its kind of like an agency within an agency? I guess its all down to what cut they take, the job I looked at was 9.50 ph, so if they take 15% then I’m looking at losing around 1.40 per hour leaving my true rate at 8.10 ph. which is about the going rate around here for class 2why do they have to keep making things more complicated and tying us up in red tape?
Because drivers keep letting them for there £1 per hour, I will only ever work PAYE because i no i can claim everything back from the taxman myself without paying them
It is easier for the agency for you to be umbrella as less work for them if you work for more then 1 agency you can use 1 umbrella company instead of several as you can only use your tax code for 1 the rest will be basic rate
So this way you could use your tax code for all or go self employed then do your own tax & NI
Mac, I totally agree, I would rather a quid an hour less and know where I am… but if I won’t do the umbrella, someone else will and I won’t get any phone calls paye, is what is written between the lines.
its a moot point anyway, I’m not about to jump ship and lose my redundancy, but I want to know how it works for in a couple of months time when I do need use the agency.
I think that I will be working for a few agencies to keep in constant work, that’s usually how it happens, so maybe using one of those schemes may be the better option?
I worked agency for 8 years and never went on umbrella, whenever they mentioned it just told them not for me
I’ve worked for agencies since I started driving and before. Before I was working for Celsian (education) that used PayPoint (umbrella) who were very good and did pay my NI and tax and claimed extra expenses for me. Which is almost like being self-employed and using an accountant - either will cost you.
Just recently I’ve been working for three (driving) agencies, two were using umbrellas and one was PAYE. I recently started paying more attention to my payslips because it mentioned that the BTR scheme was ending (mileage). I discovered I hadn’t been paying any NI or tax through the umbrellas and will have to complete a self-assessment tax form at the end of April. Meaning there will be a bill to pay.
What’s worse is I haven’t been paid a better rate from the two agencies to take account of my self-employed status. I thought umbrellas worked in the same way as PayPoint. You know what thought did - it did nothing for me…
The worst thing was when I contacted HMRC they told me that one of the umbrella companies registered me as self-employed WITHOUT telling me.
Guess which agency I like the best?
Luckily I have done the vast majority of work through the PAYE agency, so my tax bill won’t be too bad.
Thanks for all the info. Think I will stick with PAYE. I am with an agency on PAYE. £8 an hour weekdays and a tenner an hour Saturdays (7.5 ton).