IR35 Umbrella or Self Employed

christmasparty

Hi not sure if I'm in the right category
Advice please - I work as a Agency Nurse through my Ltd Company and this is changing in April. I am unsure whether to go Self employed or Umbrella
Can anyone help please

deedee71

I'm not sure what you mean by self employed.  What does your agency say the options are?
Is the work you do being deemed inside IR35 now?

autoeng68

Hi you need to know if you are going to be "inside IR35" or "outside IR35". If you are "outside IR35" then you can carry on paying yourself through your Ltd company as before and your earnings will be the same. If you are "inside IR35" then you can continue to to pay yourself through your Ltd Company, but you will have to pay tax and NI exactly the same as a direct employee and you will see a significant drop in income, but will have no employment rights You can alternatively get paid via an umbrella company, who will still take Tax and NI out of your earnings as if you are a direct employee, but will also charge you a fee (usually around 5%). Its a lose, lose situation i'm afraid, and one that i personally find absolutely outrageous particularly when the government is claiming no one is facing a Tax rise whilst the pandemic is happening!

deedee71

autoeng68 said:

Hi you need to know if you are going to be "inside IR35" or "outside IR35". If you are "outside IR35" then you can carry on paying yourself through your Ltd company as before and your earnings will be the same. If you are "inside IR35" then you can continue to to pay yourself through your Ltd Company, but you will have to pay tax and NI exactly the same as a direct employee and you will see a significant drop in income, but will have no employment rights You can alternatively get paid via an umbrella company, who will still take Tax and NI out of your earnings as if you are a direct employee, but will also charge you a fee (usually around 5%). Its a lose, lose situation i'm afraid, and one that i personally find absolutely outrageous particularly when the government is claiming no one is facing a Tax rise whilst the pandemic is happening!

The umbrella fee shouldn't be anywhere near 5% (unless you're on a very low day rate).  Cost should be around £22 per week.  They may charge an additional £5 to process a pension contribution to your own SIPP/Stakeholder pension.   Only a very few actually allow this but it's very tax efficient. There will also be a deduction for the apprenticeship levy (which I agree is outrageous!).

To the OP, my understanding is inside and  ltd isn't cost effective.  The agency may run their own payroll or wash their hands of it and point you to an umbrella.  So, it all really depends on what your agency is saying.

autoeng68

I've just read an interesting artical ref IR35 that references that points out that the official HMRC guidance is that if you are moving "inside IR35" your agency (or umbrella) should re-negotiate your pay so that its increased by (employers NI) .
This is the guidance:- Off-payroll working in the public sector: reform of the intermediaries legislation - information for agents - GOV.UK (www.gov.uk)
This is what it says ref employers NI:-

"7. Secondary Class 1 (employers’) NICs

Because the fee payer has a liability to pay secondary Class 1 NICs, they are likely to wish to renegotiate the fee with the intermediary to reduce the rate for the job. They cannot lawfully deduct the secondary NICs from a fee that has been agreed, but could, depending on the contractual terms, negotiate a lower fee."

I'm guessing this hasnt happened for you, and i'm well aware that this is not happening in the Automotive Industry.

I would challenge you agency with this, and if they refuse take your story to a newspaper, as you are a nurse they'll be a lot public sympathy for you.

Marcon

autoeng68 said:

I would challenge you agency with this, and if they refuse take your story to a newspaper, as you are a nurse they'll be a lot public sympathy for you.

Non-story, I'm afraid, so unlikely the newspapers would be interested. Even if they were,  why on earth would anyone want their private life or work splashed around in public?

If you believe there is a story, perhaps MoneyBox on Radio 4 is no bad starting point, not least because you don't have to give your name.

autoeng68

Its not my Story?