Umbrella Company deductions

keplpies

Can anybody explain to me what 'employers costs'  (75 pounds ) and 'company overhead' (16pounds) involve?  Im working long hours, under difficult circumstances in social care and this deduction is starting to grate.  TIA

Brie

no - but I'd be annoyed if my employer was charging me money to work for them.

do you have a contract of any sort?  what does it say about any charges??  it's possible that you might be charged for a uniform but I think there was a recent case about how that wasn't legal?? (something about John Lewis being the worst offender??)

And are you getting at least minimum wage with these deductions being made?  If you aren't then that's completely wrong.

General_Grant

keplpies said:

Can anybody explain to me what 'employers costs'  (75 pounds ) and 'company overhead' (16pounds) involve?  Im working long hours, under difficult circumstances in social care and this deduction is starting to grate.  TIA

Have you looked through Working through an umbrella company - GOV.UK (www.gov.uk) ?

JCS1

Brie said:

no - but I'd be annoyed if my employer was charging me money to work for them.

do you have a contract of any sort?  what does it say about any charges??  it's possible that you might be charged for a uniform but I think there was a recent case about how that wasn't legal?? (something about John Lewis being the worst offender??)

And are you getting at least minimum wage with these deductions being made?  If you aren't then that's completely wrong.

The title of the thread mentions an umbrella company.

Grumpy_chap

keplpies said:

Can anybody explain to me what 'employers costs'  (75 pounds ) and 'company overhead' (16pounds) involve?  Im working long hours, under difficult circumstances in social care and this deduction is starting to grate.  TIA

In order to exist the umbrella company have to cover their costs and profits - that will be the fixed fee of £16 per week.  That is pretty much the market rate for the service, even towards the lower end.

The employers costs is most likely employers NI, apprentice levy, plus compulsory employers contribution to pension. 

Depending on how they account for holiday pay, there may be an element of holiday pay withheld to then pay when you are on leave.  The other way is to just pay you as you go, but then you get nothing when you take annual leave.  Many umbrella companies operate in the latter way as it can be simpler.

What are the details in the contract you agreed?

What are the full entries on your payslip (no need to share numbers, just the text of what entries there are)?

keplpies

Holiday pay is a further deduction on top of the 'employers cost'

Sandtree

Brie said:

no - but I'd be annoyed if my employer was charging me money to work for them.

do you have a contract of any sort?  what does it say about any charges??  it's possible that you might be charged for a uniform but I think there was a recent case about how that wasn't legal?? (something about John Lewis being the worst offender??)

And are you getting at least minimum wage with these deductions being made?  If you aren't then that's completely wrong.

You have to remember this is an umbrella so isnt the company the OP is doing the work for.

So the OP will have agreed to do a job for a company at say £400 per day but the company requires the OP to use an umbrella. If the OP works 5 days in a week the umbrella therefore gets £2400 (£400 x 5 + VAT).  The umbrella takes £16 as their own margin and the remaining £1,984 goes into a tax calculator which will workout the employer's NI, employee's NI etc. Anything that is on the employers side of the fence gets deducted off and lumped under the Employers Costs, the rest is the employee's money less what has to be collected for HMRC.

So outside of the £16 all other deductions go to the tax man unless the OP decides to not opt out of the pension or decides they want paid holiday in which case an accrual for that will be held (there is no "use it or lose it though, if they don't use it then it gets paid to them at year end). 

keplpies

Thanks for the replies.
The umbrella company was vague but said it was due to National Insurance contributions and was already factored into how much we are being paid.

Still non the wiser

keplpies

We are already being taxed and paying national insurance.  Can somebody state simply why we are paying twice?

Andy_L

keplpies said:

We are already being taxed and paying national insurance.  Can somebody state simply why we are paying twice?

There are employers NI contributions (which the umbrella company is paying) as well as the employees contributions (which you are paying).

chrisbur

keplpies said:

We are already being taxed and paying national insurance.  Can somebody state simply why we are paying twice?

There is an explanation of umbrella companies here....
https://www.gov.uk/guidance/working-through-an-umbrella-company

The section "How you get paid" is the bit that explains the employers NI part.
I personally am not fully convinced but doubt there is anything you can do about it other than find a PAYE job.