Umbrella company

[solo]

No, not the telescopic, brightly coloured, always turning inside out, golfing variety.
These "umbrella companies" are also apparently known as "composite companies". I've just started doing some work for an agency (hack....spit). Already they're pratting about with the pay rate. Apparently, to qualify for the rates which were originally quoted to me, I have to have my wages paid to me by one of these umbrella thingies. I've had a quick look on the web and other than the paying of a fee it doesn't seem too bad. Just wondering if anyone here has had any experience with this sort of thing. Last time I worked for an agency it was on the SC60. Things appear to have changed a bit since then. TIA

 

[neds]

I was contracting for a bit and used Giant for an umbrella company, they paid via BACS and was PAYE calculated. Wasn't too bad when you worked it out, something like £13 a week for all the admin work, Just saves me heck of a lot of time. Also they deduct travel expenses and subsidence from tax payable which was nice.

 

[JohnD]

I have formerly used an umbrella company.

things to look out for:

what are their charges? mine charged per invoice to customer and per payroll run (so weekly pay cost more than monthly pay, and it cost more to have your expenses paid separately than together with pay

How long is the delay between them receiving payment from the client, and you receiving it?

Do they pay by BACS or quickpay? If they send you a cheque in the post it is a trick to extend the period the money is in their account not yours

If they stop paying or become insolvent or the owner runs off to Chile, you will lose your money. make sure the client is aware that if this happens you will be looking for another job (they will want to take the view that it's your problem not theirs, since you are the employee of the umbrella, not the client.)

You will probably be an employee, on PAYE. That means that employer's NI will be due, which will come out of your fee. About 12%, no max cap.

Allowable expenses can be claimed from the umbrella, and paid to you without tax deducted.

There will be no holiday pay or sick pay, unless it is funded by a deduction from your earnings. If they deduct from your earnings, you may never see it.

Will they make contributions to your pension fund? this saves not only income tax, but also both employer's and employee's NI, so it is better value for you than if you make contributions from your taxed earnings. Be sure any savings in NI are passed to you and not pocketed by the company..

It can be an advantage if you want to apply for credit or a mortgage, since you have the status of a salaried employee.

 

[solo]

Very helpful. Thanks for the info guys.