Umbrella Companies advice?

emmalouisemurray

I have just taken a new job where I am informed that I am paid by an umbrella company. I work permanently in the same location and realise that I am not able to claim expenses as this 'company' keeps telling me.....the rest of the workforce are labourers and this works for them. My concern is how does this affect my application for Tax Credits.....this company takes part of my wages for their fee and part of my wages (I believe) for my employer's NI Contributions......however, do they take this before or after tax? If it is after tax then it looks like I bring home more than I actually do which will affect my Tax Credits. This whole thing seems a little 'odd' to me
Any serious advice anyone?

SarEl

I'm not an expert on the subject - but I know that you can claim home to work mileage for any contract work for (I think two years or so! ) because my temps all do it! Perhaps you should listen to what they are telling you?

InsideInsurance

You will simply be an employee of the umbrella and you will get a payslip every week/month just like a regular employee.

So in most cases there is a supplier (you), an umbrella, an agent and a client. You complete a timesheet and get it signed off by the client and submit it to the umbrella. They pass it to the agent. The agent raises an invoice for number of days worked x day rate + agency fee (typically 15-20%) + VAT.

The umbrella raises an invoice and passes it to your agent for days worked x day rate + vat. Once the agent is paid they pass on the money, net of the agency fee, to the umbrella.

From this monies the umbrella will pay you your salary retaining the money for income tax, employee & employer NI and their fee. So the employer NI etc comes form the fees your earning them but not from your salary (just like you were working for any company)

The few umbrella payslips I've seen look just the same as any other employee's payslips.

As you work for the umbrella but are typically working at one of their clients sites on a temporary basis there are a number of things that you can claim as expenses (eg travel and subsistence) whilst the duration of you working there is going to be under 2 years (not it is future tense so as soon as you know it is going to be over 2 years rather than it actually being 2 years then you should stop claiming them).

You really should be speaking to the umbrella or agent who will explain everything properly

emmalouisemurray

But I do know that it is a permanent job? So with that knowledge I cannot claim back expenses? I have always been employed by my employer and am a little confused by it all.....the fact that I have to pay a fee for a service I don't want, out of my wages or at least that is how I read it to be.
No-one seems to answer how this affects Tax credits and yet it looks as though my take home is going to be less than what I was on before!

SarEl

OK - either me or you is very confused. If it is a "permanent " job (leaving aside the fact that there is no such thing ) then you are employed by an employer and not an umbrella company (which is one of they ways of being a contractor or temp ). Would you like to start again, and instead of telling us what you think you know, tell us the facts about the job and how you are employed?

emmalouisemurray

The issues with Tax credits are that they ask your income before tax, NI etc.....my point is that my earnings reflect a much higher rate than that which I actually take home and therefore they will deem me as earning much more before everyone takes their bit out of the pot.

emmalouisemurray

Thanks Sarl

Yes. I am working as an office manager for a construction company. All the chaps are paid by the Umbrella company which is the 'norm' in the industry. Because they travel to different sites etc all the systems apply to them.
I however, travel to the same place of work (the office) and work 35hours/week for the same employer (the employer uses the Umbrella company to pay the men's wages).
The Umbrella company have been told I am not an agency staff that I am working in the office on set hours a week and yet they still say that they can pay me. They still maintain I can claim back expenses however, the internet says different as I know this to be permanent employment, over 24 months.
I cannot see how/why this is going to work for me?
Sorry if I put this across in a confused manner, but I am exceedingly confused/worried about it!

emmalouisemurray

Sarel,

I must also add that this is not a temporary contract....this is as far as any job can be, permanent.

LittleVoice

If you believe that you will work there for more than two years, then you are correct that you cannot claim travel or subsistence allowances.

I worked with a contractor who lived so close to his place of work that he walked home for his lunch (from normal household spending, not specially bought each day) and had been working in the same location for more than two years but was still claiming expenses saying that his time away from home (from start to the end of the day) was sufficient and that his umbrella company were still arranging payment on that basis and he was never asked to produce receipts showing the daily purchase of lunch items. So I think the umbrella companiges/agents don't always get it right.

Regarding your pay, your pay is what would show on your payslip as your gross income. That should not include the employer's NI, agency fee. Ask them for an example of the payslip they provide (eg name of employee "A N Example", NINo "AA1234B").

emmalouisemurray

Little Voice,

from what I can gather if you continue to claim for expenses with the knowledge that you are 'employed' on a permanent basis then it is your fault and not the fault of the Umbrella company if you are inspected by the tax office......a huge risk to take and not one I am prepared to take. Really I am contracted, not a contractor which is why I don't really fit the Umbrella company's structure and this is what I find confusing.

agrinnall

Does the company (rather than the Umbrella company) have any employees itself? If it does then I can see no reason why you shouldn't also be employed directly instead of through the Umbrella company. I don't know for sure but I suspect HMRC would not be keen on the arrangement you have described when in reality you are a permanent employee of the company.