If you are employed by a company then that company must deduct income tax and National Insurance on all earnings. You can only take advantage of umbrella status because you are not an employee of the agency or client. You are an employee of your umbrella company and you have full and permanent employment. You are legally paid the national minimum wage, tax free expenses and, where applicable, extra salary. You can also claim normal statutory benefits.
No. You are paid weekly and provided the umbrella company receives payment from the agency for the work carried out by you on, or before, Friday our administration support will do the calculations and send your wages, together with your tax free expenses electronically to your account so that you can access your money no later than by close of business Friday.
No, for a small weekly fee our administration service will take care of everything. All you need to do is complete the Registration Form and submit your expense claim. The weekly fee includes the processing of expenses, and PAYE payslip. All the employer company administration and year end reporting procedures such as Accounts, Company Tax Returns, P60s and P11d's.
Yes. You are entitled to 28 days of holiday a full year, based on not less than your normal working week of 39 hours, starting from the first day at work. The umbrella company must ensure you are paid holiday pay at the rate of 12.07% of the salary element of the money you are paid for your work up to the 39 hour normal working week. Your salary and therefore your holiday pay depends on our company’s income, our costs and the level of expenses claimed but it cannot fall below the National Minimum Wage (NMW).
You have a choice as to how you receive your holiday pay. Unless you indicate otherwise we will normally retain your holiday pay and pay it to you as and when you are on holiday subject to the amount we have retained. This is known as accrued holiday pay. Alternatively you can choose to receive your holiday pay each week and the amount is shown as a separate entry on your payslip. As you receive your entitlement weekly it is important you put this money aside for any holidays you wish to take. You will not be paid extra when you go on holiday.
Not as long as all expenses claimed qualify under the tax rules. Our expenses policy clearly sets out what you can and cannot claim. You must read and understand this before completing any expense claim. We must receive a signed form together with the original receipts. Note that the umbrella company can only pay your expenses with the money it has available to it. Unpaid expenses are carried forward. Some umbrella companies either abuse the expenses rules or fail to operate them properly. Where this happens the worker may become liable for the tax due. HMRC has special units set up that audit umbrella companies.
This is tax/National Insurance Contribution (NIC) legislation only, and there are no exemptions even for those who are ‘genuinely self-employed’ for other purposes. The new rules apply where it cannot be shown that there is no right of control by any person. Take for example, a 20-years experienced sole trader with his own trading name, a van, tools and equipment doing a job working for an Agency. The Agency’s contract with the Client states that the Client has the right to supervise the manner of the work. Even if this supervision is not used in practice, the new rules apply and PAYE must be operated.
There is an exception where an Agency relies on what are called “fraudulent documents”, where the client tells the agency there is no control when they know there is, but there are several conditions attached to it. Where there is a right of control by the Client written into a contract then this exception will not be of much use.
No, and it is important to remember that this is purely new legislation for tax and NIC purposes. One of the difficult parts of these new rules that everybody has to get to grips with is that the legislation will tax self-employed individuals as if they are employees. You will remain self-employed for all other purposes unless your contract is altered. This legislation is what is known as a ‘deeming provision’ and treats you as if you were an employee just for tax/NIC purposes, even though you are not an employee at all. For all other purposes (e.g. employment rights) the normal rules set out by the Courts will still apply, as was made clear in the original consultation. You will not qualify for general employment rights as a result of these rules.
The new rules make life very difficult for anybody who is self-employed and getting their work through an agency, not least because most agency contracts normally have to include a clause saying that the Client has control over the worker. However, where this is not the case and there is no control or right of control, PAYE/NIC will not be due.
These are new rules and there are some areas that will need to be settled by the Courts over the coming years (yes, years). There are various arguments about the control test, but the generally accepted interpretation is that the Courts will have to be satisfied that there is no right of control in any contract anywhere in the supply chain. That on a day to day basis, the Operative is not actually controlled and that the Agency will have to prove both of these things, or else the new rules will apply. There are also other issues for the Agency to consider such as insurance and other liabilities.
It is less likely that a skilled Operative will be subject to day to day control. However if the Agency has a contract with the Client which says that the Client has a right of control, the new rules will still apply, even if the Operative is skilled and not controlled on a day to day basis. This is a difficult area as even many Agencies may consider skilled Operatives should be outside the legislation, but in fact the Agency’s typical terms with their Clients will probably bring them within the new rules. It may be difficult for Agencies to change their terms of business as this will have implications for their liability and their insurance costs.
The new rules apply purely on the basis of the control test. It does not matter whether you are engaged on price work or an hourly rate. The same can be said about raising an invoice, or providing tools, equipment or materials. The normal tests of self-employment do not apply any more.