Umbrella Companies, talk to me

[Swillsy]

Hi Guys,

having a look at new jobs at the moment and I've been told I can get paid more if I work for an umbrella company. Can someone tell me how this works

Cheers

Swillsy

[merc_man]

In my opinion avoid. Set up your own limited company instead.

What area of work?

[Swillsy]

IT support

[spikeyhead]

Were you told this by someone that runs an umbrella company?

[Swillsy]

hehe well yes, I was just trying to think how this works and whats involved.

[plasticpig]

There arent that many umbrella manufacturers in the UK. If you really want to work for an umbrella company try these people: http://www.manchesterumbrellas.co.uk/britishmade.h... otherwise you will need to move to India or China.

[silver.fox.2008]

plasticpig said:

There arent that many umbrella manufacturers in the UK. If you really want to work for an umbrella company try these people: http://www.manchesterumbrellas.co.uk/britishmade.h... otherwise you will need to move to India or China.

[deckster]

Swillsy said:

having a look at new jobs at the moment and I've been told I can get paid more if I work for an umbrella company. Can someone tell me how this works

It doesn't. The only ways an umbrella can get you more money is by:

- claiming expenses you haven't incurred, or
- channeling money through an offshore trust/loan scheme

In both of those cases, if and when HMRC notice they will be down on you like a very expensive ton of bricks.

Assuming you're a contractor or some sort, umbrellas are an easy way to get paid and aren't too much different to running a limited if you are IR35 caught, or if your daily rate is low. If you are on a decent rate and can place yourself outside IR35 then you are far better off running a limited.

Much much more information here.

[ali_kat]

I use these. The page I've linked to explains why an Umbrella Co.

If this is your first contract, then I'd recommend using an Umbrella rather than set up your own Ltd Co. If you like contracting, you can easily do that (my UC will even help you!). But contracting is not for everyone, and it is a lot of hassle to set up & then close a Ltd Co if you are one of those.

UC charge a fixed fee (per payslip), pay you even if they haven't recieved the expected funds from your agency, and guarantee you an answer to your query within 3 working hours (I've never had to wait that long!). You can register & submit your timesheet & expenses on line, and get a dedicated person to help you

[Swillsy]

Cheers deckster forum looks gd, just had a convo with my dad about how it works and it seems a similar setup to what I'm on at the moment so not too much of a biggy.

Wont be getting paid enough to justify a Ltd I think

[ali_kat]

deckster said:

It doesn't. The only ways an umbrella can get you more money is by:

- claiming expenses you haven't incurred, or
- channeling money through an offshore trust/loan scheme

In both of those cases, if and when HMRC notice they will be down on you like a very expensive ton of bricks.

When an accountant processes expenses he will normally need to record the details on an Inland Revenue form called a P11D and also be able to produce receipts to support those expenses. This creates a great deal of work for an Umbrella Company so they apply for a dispensation from the Inland Revenue which allows them to process some expenses without having to record them on the P11D or file receipts.

However, the dispensation does not apply to you, as an individual, and therefore you must keep receipts for any expense that you claim. It is also not an indication of the expenses that you are entitled to claim – to claim an expense you must have first incurred the cost and it must be wholly and exclusively incurred in the performance of the contract.

Any amounts quoted on the dispensation are the limits up to which the Umbrella Company can process expense claims without recording them. If the limit shown for accommodation is £95 it does not mean that you can claim this amount each night that you stay away from home – if you only spend £65 you can only claim £65.

[Swillsy]

Fantastic ali_kat, the guide on there is exrtemely useful and exactly what I'm after

[ali_kat]

They really are great - if you plan to sign up with them, let me know and I'll tell you my name to put as the recommendation

[Swillsy]

k will do ali

[ali_kat]

I don't get anything BTW, but they do like to know that people ahve recommended them

[Swillsy]

Well jsut an update - going with parasol - not really a choice I've made but was made for me:-8

I've worked out what the guy was tell me about my rate being different coz im able to claim alot of my income as expenses like petrol food and drink and wont be taxed on it so in affect i'd be earning more.

[Austin3000]

Swillsy said:

Well jsut an update - going with parasol - not really a choice I've made but was made for me:-8

I've worked out what the guy was tell me about my rate being different coz im able to claim alot of my income as expenses like petrol food and drink and wont be taxed on it so in affect i'd be earning more.

Just be careful, especially regarding the IR35. If your going to claim your outside then its becoming more and more risky. There was a new box on the self assesment form this year that implicated you if you claim to be outside and were'nt really.

I would never trust an Umbrella as heard too many horror stories but Ltd company is only really cost effective if you earn quite a lot as you have accountants fee's and if you've any sense you will pay for a bloody good accountant!

[ali_kat]

Austin3000 said:

Swillsy said:

I've worked out what the guy was tell me about my rate being different coz im able to claim alot of my income as expenses like petrol food and drink and wont be taxed on it so in affect i'd be earning more.

I would never trust an Umbrella as heard too many horror stories

Don't tar them all with the same brush!

However, I'm concerned about Swillsy being advised he can claim food

You can claim actual meal costs whilst you are working at a remote site i.e. away from your normal place of work or when staying away from home overnight but daily claims for meals are not permitted.

It is the Inland Revenue’s belief that “The cost of food, drink and accommodation is not in general an expense incurred wholly and exclusively for business purposes, since everyone must eat in order to live...”

EFA - bloody formatting

Edited by ali_kat on Tuesday 28th October 14:34

[Eric Mc]

Swillsy said:

Well jsut an update - going with parasol - not really a choice I've made but was made for me:-8

I've worked out what the guy was tell me about my rate being different coz im able to claim alot of my income as expenses like petrol food and drink and wont be taxed on it so in affect i'd be earning more.

I'm afraid you might be very much misled.

If you are with an umbrella company - how come you are going to be able to claim "business" expenses?

Edited by Eric Mc on Tuesday 28th October 15:10

[Swillsy]

Ive been told you can claim the mileage used to get to and from work as well as any used for business purposes.

In regards to food and drink - if your working, away from home for 10 or more hours a day you get to claim 15 pounds in food expenses.

whe nI say expenses I mean money from my wage I will not be taxed for.