Umbrella company offering Free Money??!!

[Dan59H]

A nice sounding lady called Alice is ringing me quite persistently from my Umbrella company offering me (she says) a weekly return on VAT to supplement my wages.
I'm EXTREMELY suspicious as it sounds like a way of disguising PAYE NI contribtions in the wage packet every week, The sales technique is pretty pushy too.

Anyone know genuinely what this is all about because to me it looks and quacks like a way of getting a few extra quid out of my pocket. As always happens when googling these sort of questions just ending up at HMRC.gov

Cheers

Daniel.

 

[amckay]

Don't sign up to ANY umbrella company. They will rip you off.
I guy I know owns a recruitment agency for warehouse staff and for every 4 employees he transfers from PAYE to umbrella he saves £11,000 per year. And for each employee who goes umbrella gets about £1 an hour extra. But umbrella fees are stupidly high and you could end up loosing 40% of your wages.
If your doing sub work go ltd

 

[Guest111]

what you doing on a sparks forum if you've got an umbrella company? don't they have forums for people who make brolly's? lol:clap:

 

[Adam W]

Is she talking about expenses? You send them a fuel receipt and they take 45p per mile off the tax you pay. Same with other work-related expenses such as tools, PPE, work related phone calls, laundry, lunch at work etc. You don't get the full amount back, they just take that off how much you've earned before calculating how much tax you pay, eg if you earn £400 and spend £100, you only pay tax on £300 of your earnings.

 

[Risteard]

You send them a fuel receipt and they take 45p per mile off the tax you pay.

Only get 20% of the 45p/25p per mile off the tax paid surely?

 

[Adam W]

Only get 20% of the 45p/25p per mile off the tax paid surely?

You don't get the full amount back, they just take that off how much you've earned before calculating how much tax you pay, eg if you earn £400 and spend £100, you only pay tax on £300 of your earnings.

 

[Deleted member 26818]

I had a phone call last year, from an accountancy firm that my umbrella company uses.
Apparently there is some scam, where someone can claim the VAT paid by us 'the workers'.
Not sure who would have benefitted?

 

[R G]

I have just found out what its about , the flat rate scheme is used , so you would have to be vat registered , then the umbrella company pays you 20 percent of your total i.e. say £400 pay + 20 percent = £500 , you would pay apron 10 percent on the flat rate scheme say , so you would pay £50 back on the £100 , leaving you £50 up , thats for the weeks work , so if your not a ltd company and you work through an umbrella company it would be well worth doing , but you would have to be VAT registered though , the drawback is if and when you do your own work and you have high material expenses , and also I think once on the scheme you can't get back out of the flat rate scheme ..

As regards expenses with vat on them like fuel , if you put these in then you would claim back the vat from the umbrella company and they would then reclaim the vat and pay you all the vat so should be no change there , its the NI conts thats the killer , but VAT is payable before any other deductions are made i.e. on the gross amount..



Overall I think the umbrella company are pushing it to hold on to people , because I think a lot of people are going LTD and bypassing them, but if you do that and went on the flat rate scheme you would be a lot better off too ..

 

[Dan59H]

Thanks, I thought it was a big ruse to get the NI conts out of you and tap a bit of the rebate week by week so you don't feel the pain. I knew someone would have gotten to the bottom of it

 

[robwgun]

This is a common method now, as last April tax changes were made, and a lot of agencies supplying labour are encouraged to do an Umbrella PAYE payment as opposed to being CIS, apparently the
tax man doesn't like CIS working for the same employer constantly.


It's not free money as such , if you are PAYE through an Umbrella company you can claim mileage money, food money, and any other general expenses back, and it will offset the weekly amount of tax you pay, no different to what you would do yearly if you was self employed on your tax return.

I work for one of the big social housing companies,and my first 3 months working for them was through an agency, yet to confuse matters I was PAYE through a payroll company.

It was hassle offsetting expenses weekly, but it does reduce the amount of tax you pay.