Agency work pay

Poppy9

My DD has been offered a job via Reed agency. She said that she will be paid via a Ltd. company as its advantageous for her. What do they mean and what are the tax/Ni implications for her?

It's 2 months of work in the public sector.

System

Look up umbrella companies. The agency get to wash their hands of employers NI and all that pesky employment law. She would be charged a weekly fee by the umbrella company and they will offset her expenses against tax to lower her income tax and NI bill. They will also deduct 12.7% from what the top line hourly rate the agency pay in order to cover her holiday pay which she will get back.

However the HMRC are treating this as disguised employment and are starting to crack down. If they deem it was disguised employment she could get a tax bill down the line for 20% of everything that was claimed as expenses by the umbrella company.

agrinnall

Unless she's on a ludicrously high rate there's very little chance that starting a limited company just for 2 months work would be beneficial over using an umbrella company.

Poppy9

She's been told she can be paid via Reed or via Ltd company and payroll will ring her thursday and I'm assuming she can decide then? Should I tell her to go for being paid via Reed.