Umbrella - what's the catch?

**Wanderer** · 16 October 2012, 20:51

Originally posted by Popkins View Post

The agency I'm with has recommended a company....

They say I'll get taxed PAYE each week, taking home 80% of my weekly gross earnings. Their fee will have been deducted from the 20% I don't get. How can they offer such a good deal? Any key questions I should ask them?

Welcome

The politest thing people here will tell you is that schemes are widely considered to be high risk and you should think very carefully before joining one. If you are "paying PAYE" then there is no way you will take home 80% of your gross income via PAYE unless you are a low earner (<20k/year).

As a LTD company and outside IR35, you can indeed take home up to 80%, there is a calculator here.

I don't know of the scheme provider you mention (or if they are even a scheme provider at all) but here are a couple of questions for you to ask about schemes generally:

1. How much of the 20% of the gross income that you don't take home is actually paid to HMRC (ie, as PAYE)? Some schemes I've seen take about 15% as fees meaning people are are paying less than 5% income tax on earnings of £50k+ and you know that isn't going to make HMRC very happy.

2. How much are they paying the agency who referred you to them? If they won't answer this question then you have to wonder why they won't. It's easy to suspect that they are paying a big fee for referrals because some of these schemes appear to net a massive profit with very low running costs.

3. If this is a "loan" or "trust" scheme then what happens if the company goes into liquidation and the liquidator demands the loan be repaid? Do you feel comfortable with having a "loan" that you never pay back?

Finally, have a think about how they describe the scheme to you. Do they have a long winded conversation along the lines of "it's complicated" or do they put the explanation in writing on their website? If it's not all explained on their website then ask yourself why not? Is it that they want to obfuscate how it works? Does it involve some offshore company, a loan or employee benefit trust at any stage? If it does then walk away.....

I recommend you take advice from an accountant and consider setting up a LTD company.

**kingcook** · 16 October 2012, 21:17

Originally posted by Popkins View Post

Hi guys,

I'm about to start locum work for the first time on November 12th. The agency I'm with has recommended a company called Absolute Accounting and Taxation Solutions Limited. Ever heard of them? Any good?

They say I'll get taxed PAYE each week, taking home 80% of my weekly gross earnings. Their fee will have been deducted from the 20% I don't get. This seems much better than a normal umbrella company, where most seem to say you'll get about 65% of your earnings AND charge you 20 quid a month. I'm aware that there's quite a few dodgy loan scheme companies out there. Is Absolute one of them? How can they offer such a good deal? Any key questions I should ask them?

I've asked a couple of accountants about setting up an Ltd, but most say that the take home money would be about 75-80%, so Absolute is much more appealing. What's the catch?

Thanks for any help.

I can't believe you'd take home 80% as PAYE. How is that possible?

Do the right thing and setup a Ltd Co, you'll sleep easier.

**LisaContractorUmbrella** · 17 October 2012, 09:55

Have you asked them how exactly they are going to guarantee an 80% take home through PAYE?? The answer you get would be of huge interest to the posters on here - unless this is

of course

**cojak** · 18 October 2012, 12:52

Yep, 99.99% sure it's spam.

I just enjoy seeing the responses linked to it forever on the Internet

**LisaContractorUmbrella** · 19 October 2012, 10:17

Originally posted by cojak View Post

Yep, 99.99% sure it's spam.

I just enjoy seeing the responses linked to it forever on the Internet

Ooooh sneaky

Umbrella - what's the catch?