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SWD, being ltd won't help you... now that everyone has gone limited they have started to just charge them as well! I am limited and have seen 3 different agencies try to pass me onto an umbrella company in the last month. There doesn't seem to be much we can do other than sticking together and telling them where to shuv it.

There is a new website which will let us review these agencies, I for one already have a list of agencies I can't wait to review :) not all of us are in a position to subbie direct:

https://signup.earwig.work?kid=R7WMH
 
Does anyone support umbrella companies? They charge their employees around £80 a month just to pay them.

They offer the employee no rights or terms and conditions.

Some charge the employee double national insurance too

they're parasites. A lot of cleaners get paid through umbrella companies and end up with below the minimum wage. Umbrella companies and agencies are exploiting a lot of industries not just ours.
 
The term ‘Umbrella’ is used to describe a method of payment used by Agencies and Pay roll Companies, to pay Agency workers.
The method involves deducting PAYE tax, NI contributions and Employer’s NI contributions from the Agency workers’ pay, along with the Pay roll Companies’ fee.

I guess the term ‘Umbrella Company’ is used to describe a Pay roll Company that pays using the Umbrella method.
As far as I am aware, these Pay roll Companies will also pay CIS.

Another new trend, is for Agencies not to pay Ltd Companies direct, but to pay via Pay roll Companies, incurring the Pay roll Company fee.

The original use for the term ‘Umbrella Company’ was to describe a Ltd Company set up by an Agency to pay Agency workers.
The Agency worker would pay a fee to join and become a Director of the Company, then would be paid minimum wage at PAYE, with what was left over being paid as a dividend.
This practice was banned a few years back.

The ‘Umbrella’ method of payment has been around for many years as an option.

Following a directive being sent to all Agencies from HMRC about 4 years ago as part of HMRC’s crackdown on bogus Self Employment, the majority of Agencies refused to allow workers to be payed CIS, only allowing Ltd Company or the ’Umbrella’ method.
This Directive required Agencies to monitor whether the Agency workers were working as Self Employed or as Employees. Threatening to recoup any unpaid NI contributions from the Agencies if it transpired the Agency workers were being paid as Self Emplyed when they should have been paid as Employees.

My experience of this method is limited, as I refuse any work which only pays using the ‘Umbrella’ method.
However I understand that due to the sudden widespread use of the ‘Umbrella’ method, there was a dramatic decrease in HMRC’s Revenue.
This was partly due to Agency workers claiming for expenses on a weekly basis, but mostly due to the realisation by Agency workers that they can claim for Subsitance.
The way such expenses were paid, was by deducting the expense from gross pay and then deducting Tax and NI contributions.
New rules introduced in 2016 essentially put a stop to this practice.
The Agency worker now has to claim for an such expenses at the end of the year through Self Assessment.
Whilst this should result in an Agency worker receiving a rebate for Tax and Employee’s NI contribution (though in practice getting a rebate for NI is more miss than hit and miss), there is confusion as to where any rebate for Employer’s NI contribution would be made (I suspect it would be refunded to the ‘Umbrella’ Company).

On top of all this, many Agencies now refuse to pay Ltd Companies direct.
Now they will only pay through a Pay roll company which incurs a fee.

From personal experience:
I started a new job trough an Agency, just as the Agency started paying via the ‘Umbrella’ method. I was not informed I would be paid by this method.
I was at that time using a Pay roll company called Fairgate and had a contract with them to be paid CIS.
I received my first weeks pay, 2 weeks after starting and it was a lot less than I expected.
I argued with both the Agency and the Pay roll company and eventually left after finding work with another Agency which would pay CIS.
It took me 14 weeks to do so and my pay for those 14 weeks was about £2000 less than I would have received if I had been paid CIS. I did not claim any expenses during the 14 weeks, the £2000 consisted purely of NI contributions.
On top of the NI contributions deducted I was also paying my weekly Self Employed stamp.
At no time did I receive either a P45 or P60 to show the NI deductions had been paid to HMRC.
I did receive a number of new contracts from Fairgate for me to sign to be paid by ‘Umbrella’ method, which I did not sign as I was quite happy with the existing CIS contract.
 
The term ‘Umbrella’ is used to describe a method of payment used by Agencies and Pay roll Companies, to pay Agency workers.
The method involves deducting PAYE tax, NI contributions and Employer’s NI contributions from the Agency workers’ pay, along with the Pay roll Companies’ fee.

I guess the term ‘Umbrella Company’ is used to describe a Pay roll Company that pays using the Umbrella method.
As far as I am aware, these Pay roll Companies will also pay CIS.

Another new trend, is for Agencies not to pay Ltd Companies direct, but to pay via Pay roll Companies, incurring the Pay roll Company fee.

The original use for the term ‘Umbrella Company’ was to describe a Ltd Company set up by an Agency to pay Agency workers.
The Agency worker would pay a fee to join and become a Director of the Company, then would be paid minimum wage at PAYE, with what was left over being paid as a dividend.
This practice was banned a few years back.

The ‘Umbrella’ method of payment has been around for many years as an option.

Following a directive being sent to all Agencies from HMRC about 4 years ago as part of HMRC’s crackdown on bogus Self Employment, the majority of Agencies refused to allow workers to be payed CIS, only allowing Ltd Company or the ’Umbrella’ method.
This Directive required Agencies to monitor whether the Agency workers were working as Self Employed or as Employees. Threatening to recoup any unpaid NI contributions from the Agencies if it transpired the Agency workers were being paid as Self Emplyed when they should have been paid as Employees.

My experience of this method is limited, as I refuse any work which only pays using the ‘Umbrella’ method.
However I understand that due to the sudden widespread use of the ‘Umbrella’ method, there was a dramatic decrease in HMRC’s Revenue.
This was partly due to Agency workers claiming for expenses on a weekly basis, but mostly due to the realisation by Agency workers that they can claim for Subsitance.
The way such expenses were paid, was by deducting the expense from gross pay and then deducting Tax and NI contributions.
New rules introduced in 2016 essentially put a stop to this practice.
The Agency worker now has to claim for an such expenses at the end of the year through Self Assessment.
Whilst this should result in an Agency worker receiving a rebate for Tax and Employee’s NI contribution (though in practice getting a rebate for NI is more miss than hit and miss), there is confusion as to where any rebate for Employer’s NI contribution would be made (I suspect it would be refunded to the ‘Umbrella’ Company).

On top of all this, many Agencies now refuse to pay Ltd Companies direct.
Now they will only pay through a Pay roll company which incurs a fee.

From personal experience:
I started a new job trough an Agency, just as the Agency started paying via the ‘Umbrella’ method. I was not informed I would be paid by this method.
I was at that time using a Pay roll company called Fairgate and had a contract with them to be paid CIS.
I received my first weeks pay, 2 weeks after starting and it was a lot less than I expected.
I argued with both the Agency and the Pay roll company and eventually left after finding work with another Agency which would pay CIS.
It took me 14 weeks to do so and my pay for those 14 weeks was about £2000 less than I would have received if I had been paid CIS. I did not claim any expenses during the 14 weeks, the £2000 consisted purely of NI contributions.
On top of the NI contributions deducted I was also paying my weekly Self Employed stamp.
At no time did I receive either a P45 or P60 to show the NI deductions had been paid to HMRC.
I did receive a number of new contracts from Fairgate for me to sign to be paid by ‘Umbrella’ method, which I did not sign as I was quite happy with the existing CIS contract.
Thanks mate, very thoughtful to give me much details.
 
Thanks mate, very thoughtful to give me much details.
To be honest, I don’t see that signing petitions about this is the way forward.
The way forward, is to refuse to be paid in this manner.

When I was in the situtuation, I attempted to sort it out by talking to the Pay roll company and the Agency.
The Pay roll company told me it was up to the Agency how I got paid, despite the fact that I was paying the Pay roll Company a fee to pay me and I had a contract with them to pay me CIS.
The Agency told me that I was treated as being employed as I was under supervision.
In actual fact I was not under supervision.
I had been tasked with constructing a Riser over 4 or 5 floors by the Foreman, and when I enquired about some of the construction details, I was informed by the Foreman, that I had more experience than him and should just construct it as I saw fit.
The only supervision I was under, was that I actually turned up and did the hours of work that I was claiming to be paid for.

The situation has changed.
Agencies that only paid ‘Umbrella’ will now pay CIS.
I can only assume that they started losing money as workers refused to work for them.
I recently did a weeks work at THFC for an Agency called BMSL, this is the same Agency who I did the 14 weeks work for I mentioned in my previous post. They paid me CIS.
On the same job for the same contractor (Imtech) there were agency workers being paid ‘Umbrella’ through another Agency called OHUK. I had already refused to work for them when BMSL offered me the work.

If everyone refused to be paid ‘Umbrella’ the Agencies would stop using it.
Unfortunately that is not happening, and now the ‘Umbrella’ scheme is spreading to other areas of work, no longer just found in the construction industry.
 

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