Umbrella Company Issues
Discussion
Hi guys,
I hope everyone is keeping well during this difficult time.
I am a Financial Services Contractor working through my own limited company. The IR35 implementation has been delayed until April 2021 as we’re all aware. My latest contract ended on 31/03. We have been offered a new 3 month contract but have been advised that we we will need to work via an Umbrella Company. The issues I have are below:
1. We have been advised by the agency that we can only work through a specific Umbrella Company (yes you guessed it, the Umbrella Company has been set up by the agency). Is this allowed? As employees, should we not be given the choice of which Umbrella Company we wish to work through? Are there any legal rulings on this?
2. So I understand all employment costs are deducted from the income (umbrella company cost, employers’ NICs, apprenticeship levy). However, our day rates have not been uplifted to take this into consideration, therefore, we are taking a considerable drop in earnings as opposed to working through our limited companies. The day rate on our contract shows as the same amount, however the umbrella company have sent us illustrations on what we can expect to take home.
Is the Umbrella Company compliant or non-compliant in the way they are dealing with this? We as contractors are having to pay employers NI without an uplift in our remuneration. When we were made aware of the change, we were advised the day rate will remain the same and it is non-negotiable. What are the legal rulings on this?
Many thanks for your help in advance.
I hope everyone is keeping well during this difficult time.
I am a Financial Services Contractor working through my own limited company. The IR35 implementation has been delayed until April 2021 as we’re all aware. My latest contract ended on 31/03. We have been offered a new 3 month contract but have been advised that we we will need to work via an Umbrella Company. The issues I have are below:
1. We have been advised by the agency that we can only work through a specific Umbrella Company (yes you guessed it, the Umbrella Company has been set up by the agency). Is this allowed? As employees, should we not be given the choice of which Umbrella Company we wish to work through? Are there any legal rulings on this?
2. So I understand all employment costs are deducted from the income (umbrella company cost, employers’ NICs, apprenticeship levy). However, our day rates have not been uplifted to take this into consideration, therefore, we are taking a considerable drop in earnings as opposed to working through our limited companies. The day rate on our contract shows as the same amount, however the umbrella company have sent us illustrations on what we can expect to take home.
Is the Umbrella Company compliant or non-compliant in the way they are dealing with this? We as contractors are having to pay employers NI without an uplift in our remuneration. When we were made aware of the change, we were advised the day rate will remain the same and it is non-negotiable. What are the legal rulings on this?
Many thanks for your help in advance.
GolfR12 said:
Hi guys,
I hope everyone is keeping well during this difficult time.
I am a Financial Services Contractor working through my own limited company. The IR35 implementation has been delayed until April 2021 as we’re all aware. My latest contract ended on 31/03. We have been offered a new 3 month contract but have been advised that we we will need to work via an Umbrella Company. The issues I have are below:
1. We have been advised by the agency that we can only work through a specific Umbrella Company (yes you guessed it, the Umbrella Company has been set up by the agency). Is this allowed? As employees, should we not be given the choice of which Umbrella Company we wish to work through? Are there any legal rulings on this?
2. So I understand all employment costs are deducted from the income (umbrella company cost, employers’ NICs, apprenticeship levy). However, our day rates have not been uplifted to take this into consideration, therefore, we are taking a considerable drop in earnings as opposed to working through our limited companies. The day rate on our contract shows as the same amount, however the umbrella company have sent us illustrations on what we can expect to take home.
Is the Umbrella Company compliant or non-compliant in the way they are dealing with this? We as contractors are having to pay employers NI without an uplift in our remuneration. When we were made aware of the change, we were advised the day rate will remain the same and it is non-negotiable. What are the legal rulings on this?
Many thanks for your help in advance.
Your old contract ended 31-03-2020I hope everyone is keeping well during this difficult time.
I am a Financial Services Contractor working through my own limited company. The IR35 implementation has been delayed until April 2021 as we’re all aware. My latest contract ended on 31/03. We have been offered a new 3 month contract but have been advised that we we will need to work via an Umbrella Company. The issues I have are below:
1. We have been advised by the agency that we can only work through a specific Umbrella Company (yes you guessed it, the Umbrella Company has been set up by the agency). Is this allowed? As employees, should we not be given the choice of which Umbrella Company we wish to work through? Are there any legal rulings on this?
2. So I understand all employment costs are deducted from the income (umbrella company cost, employers’ NICs, apprenticeship levy). However, our day rates have not been uplifted to take this into consideration, therefore, we are taking a considerable drop in earnings as opposed to working through our limited companies. The day rate on our contract shows as the same amount, however the umbrella company have sent us illustrations on what we can expect to take home.
Is the Umbrella Company compliant or non-compliant in the way they are dealing with this? We as contractors are having to pay employers NI without an uplift in our remuneration. When we were made aware of the change, we were advised the day rate will remain the same and it is non-negotiable. What are the legal rulings on this?
Many thanks for your help in advance.
This is a new contract.
The client have taken the opportunity to review and update the way they engage with contractors and what they want the cost to be - not the day-rate, the cost to them. They've chosen umbrella, with no change in money out of the company. If you like the terms of this contract, accept it.
If not, reject it.
It's that simple.
Had this conversation today,young lady on phone,told her not getting at her,but apprentice levy,according to gov.co only applys to 2% UK company's with wage bill above £3million so why am I being expected to pay it,told them to shove it,politely,if everyone did it wouldn't be happening
You are not an employee but a contractor (we will ignore the issues relating to the fact you probably would be deemed an employee or at least worker etc given chances are you have no substitution rights and worked for one client only).
They have offered you a rate for the contract which as said above is for you to accept or reject.
We all know why they are offering this rate etc..
They have offered you a rate for the contract which as said above is for you to accept or reject.
We all know why they are offering this rate etc..
GolfR12 said:
Hi guys,
I hope everyone is keeping well during this difficult time.
I am a Financial Services Contractor working through my own limited company. The IR35 implementation has been delayed until April 2021 as we’re all aware. My latest contract ended on 31/03. We have been offered a new 3 month contract but have been advised that we we will need to work via an Umbrella Company. The issues I have are below:
1. We have been advised by the agency that we can only work through a specific Umbrella Company (yes you guessed it, the Umbrella Company has been set up by the agency). Is this allowed? As employees, should we not be given the choice of which Umbrella Company we wish to work through? Are there any legal rulings on this?
2. So I understand all employment costs are deducted from the income (umbrella company cost, employers’ NICs, apprenticeship levy). However, our day rates have not been uplifted to take this into consideration, therefore, we are taking a considerable drop in earnings as opposed to working through our limited companies. The day rate on our contract shows as the same amount, however the umbrella company have sent us illustrations on what we can expect to take home.
Is the Umbrella Company compliant or non-compliant in the way they are dealing with this? We as contractors are having to pay employers NI without an uplift in our remuneration. When we were made aware of the change, we were advised the day rate will remain the same and it is non-negotiable. What are the legal rulings on this?
Many thanks for your help in advance.
Your point 1 on umbrella choice, yeah you should have free reign to decide given technically when you join the umbrella you join as an employee and sign a contract of employment. For my current contract which I go through an umbrella for, I had the option of any umbrella. I've heard of agencies restricting it though to specifics or a few. Sharp practice if you ask me but I doubt there's much to prevent it happening. I hope everyone is keeping well during this difficult time.
I am a Financial Services Contractor working through my own limited company. The IR35 implementation has been delayed until April 2021 as we’re all aware. My latest contract ended on 31/03. We have been offered a new 3 month contract but have been advised that we we will need to work via an Umbrella Company. The issues I have are below:
1. We have been advised by the agency that we can only work through a specific Umbrella Company (yes you guessed it, the Umbrella Company has been set up by the agency). Is this allowed? As employees, should we not be given the choice of which Umbrella Company we wish to work through? Are there any legal rulings on this?
2. So I understand all employment costs are deducted from the income (umbrella company cost, employers’ NICs, apprenticeship levy). However, our day rates have not been uplifted to take this into consideration, therefore, we are taking a considerable drop in earnings as opposed to working through our limited companies. The day rate on our contract shows as the same amount, however the umbrella company have sent us illustrations on what we can expect to take home.
Is the Umbrella Company compliant or non-compliant in the way they are dealing with this? We as contractors are having to pay employers NI without an uplift in our remuneration. When we were made aware of the change, we were advised the day rate will remain the same and it is non-negotiable. What are the legal rulings on this?
Many thanks for your help in advance.
On point 2, what you've described is pretty much how it works. The umbrella processes PAYE, and for PAYE there is employers NI to be paid on top of the costs of employee taxes . But they don't get any other actual source of income , so guess what, "you" need to pay it along with their margin fees for running payroll. On the latter I found these were similiar to the monthly cost of accountancy on my ltd company (from the time when I used to go through limited). On a monthly basis it's a step change. Last month I ended up with 54% of what I'd invoiced paid out to my bank account, although my tax code is flagged as "for review" so I hope I'll see some of that back.
I'm not sure what you mean by legal rulings, you were up until now via LTD declaring yourself to be running a company. The client was happy to pay £X a day for your services via an agency. Now, having finished the contract you are saying this client will no longer engage with limited company's and wishes to only deal with umbrellas. They will pay £x a day. You can either negotiate, find another client with terms more agreeable, or accept.
You don't work for them, they don't owe you a steady amount after all your costs. They pay what they think the market rate is.
You are an employee of the umbrella company. Yes, you should be given a choice, although they are much of a muchness. However, I don't think anything illegal is happening if you are forced down a specific route.
Yes, you'll see your take home pay drop significantly. A typical indicative take home from an umbrella is 57% of gross. This can be up to 30% less than what you're used to depending on how you structure your Limited company.
Yes, you'll see your take home pay drop significantly. A typical indicative take home from an umbrella is 57% of gross. This can be up to 30% less than what you're used to depending on how you structure your Limited company.
Worth remembering that as you'll be a PAYE employee, you get some of the benefits of being one. Full NI credits etc. Beware that holiday pay, statutory sick pay ect. will still come off your invoiced amount.
Depending where you are in life, it might be worth investigating whether the umbrella company has an associated pension plan.
When I was contracting via an umbrella, I shovelled money into their pension plan (with Scottish Widows) as it meant I didn't pay NI and tax on it (so 'salary sacrifice'). In fact I did this to such an extent that I was only paying basic rate tax for the first time in many many years, but check on max pension contributions now.
Depending where you are in life, it might be worth investigating whether the umbrella company has an associated pension plan.
When I was contracting via an umbrella, I shovelled money into their pension plan (with Scottish Widows) as it meant I didn't pay NI and tax on it (so 'salary sacrifice'). In fact I did this to such an extent that I was only paying basic rate tax for the first time in many many years, but check on max pension contributions now.
I fairly recently started freelancing again Nov of last year. The agency I get work through will only deal with you through an Umbrella company.
I’m not that financially minded, so this might be a stupid question to the more learned, but under present circumstances does it mean I’m employed buy the Umbrella company. And if so does it mean they should be able to pay me under the new measures that have been brought in?
Cheers!
I’m not that financially minded, so this might be a stupid question to the more learned, but under present circumstances does it mean I’m employed buy the Umbrella company. And if so does it mean they should be able to pay me under the new measures that have been brought in?
Cheers!
Hi guys, any idea what I can do in my situation? I've been a Contractor for the last 5 years for the same business. I had a limited company. They recently advised we'd all have to move to an umbrella company by the end of February or the contract would be terminated. I was moved to the umbrella on 1st March...
Any ideas? Would I have been classed as self employed prior or redundant as the company was closed down?
No word at all from the contract company or the business I work for. My pay stops today...
Thanks for any advice!
Any ideas? Would I have been classed as self employed prior or redundant as the company was closed down?
No word at all from the contract company or the business I work for. My pay stops today...
Thanks for any advice!
Ladders said:
I fairly recently started freelancing again Nov of last year. The agency I get work through will only deal with you through an Umbrella company.
I’m not that financially minded, so this might be a stupid question to the more learned, but under present circumstances does it mean I’m employed buy the Umbrella company. And if so does it mean they should be able to pay me under the new measures that have been brought in?
Cheers!
When I joined the an umbrella company I became an employee of the umbrella and signed a contract of employment. I'm paid by the umbrella company via PAYE. Umbrella companies are covered under the government guidance (wrongly, in my opinion, but that's not the issue at hand). If you get in touch with your particular umbrella they should be able to confirm .I’m not that financially minded, so this might be a stupid question to the more learned, but under present circumstances does it mean I’m employed buy the Umbrella company. And if so does it mean they should be able to pay me under the new measures that have been brought in?
Cheers!
siovey said:
Hi guys, any idea what I can do in my situation? I've been a Contractor for the last 5 years for the same business. I had a limited company. They recently advised we'd all have to move to an umbrella company by the end of February or the contract would be terminated. I was moved to the umbrella on 1st March...
Any ideas? Would I have been classed as self employed prior or redundant as the company was closed down?
No word at all from the contract company or the business I work for. My pay stops today...
Thanks for any advice!
For the last 5 years you were a limited company director. When you moved on 1st March you became an employee of an umbrella. If you're asking if any of the government assistance covers your situation it's probably shaky ground as you weren't on payroll of the umbrella by 28th Feb which was the cut off point. You could look into claiming against whatever PAYE amount you paid yourself on a monthly basis from your own company if it is still operating but you'd need to check you are eligible to do having technically become an employee of another company. If you operated in line with most accountants advice then the PAYE element you paid yourself was probably only around £700 a month? Any ideas? Would I have been classed as self employed prior or redundant as the company was closed down?
No word at all from the contract company or the business I work for. My pay stops today...
Thanks for any advice!
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