Umbrella at the NHS Umbrella at the NHS
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  1. #1

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    Default Umbrella at the NHS

    Hi All,

    So I've only just recently started contracting (IT) with a new limited company and got everything setup on my end. My wife has now also gone into contracting and will be starting a new contract with the NHS (not IT).

    The agency is apparently saying she cannot use her own limited company with the NHS and it has to be through an umbrella, my question is, can I put her on my payroll as a PAYE only (not a director or shareholder) and would that work well? Just figured we'd save $$ as well as having to deal with an external company and the invoices/payroll is easy enough through Freeagent.

    She asked the agency and they replied with "unfortunately you are not able to use limited in the public sector (NHS)" - I just wanted to confirm my understanding that the above I've mentioned wouldn't be any different than my wife going through some other official umbrella company compared to my own.

  2. #2

    More time posting than coding


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    But her not being able to use her own Ltd Co is the same as your not being able to have your wife payrolled through yours.

    Tax and NI being deducted at almost source via the Umbrella is the dictate due to IR35 conditions in the Public Sector.

    All this I am guessing might be to protect the Public Sector from contractors saying; "Pay me through my LtdCo and I promise to deduct NI and Tax as though an employee." And then reneging on the promise. It'll come back to bite the NHS on the ass...

  3. #3

    Should post faster


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    It depends on the NHS Trust and the agency.
    My last NHS gig I had to use umbrella however the gig before that they allowed me to use my own LTD. I was put onto the agencies payroll who deducted the taxes at source, they then paid my LTD the remaining as a deemed payment (if I remember correctly) which all went into my PAYE.
    You need to ensure your accountant/accounting system is able to be set up in such a way.

  4. #4

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    Quote Originally Posted by simes View Post
    But her not being able to use her own Ltd Co is the same as your not being able to have your wife payrolled through yours.

    Tax and NI being deducted at almost source via the Umbrella is the dictate due to IR35 conditions in the Public Sector.

    All this I am guessing might be to protect the Public Sector from contractors saying; "Pay me through my LtdCo and I promise to deduct NI and Tax as though an employee." And then reneging on the promise. It'll come back to bite the NHS on the ass...
    I'm still confused as to what the difference is between some random umbrella company and my company. The umbrella company is also 'promising' to pay the NIC etc and would be the same as me, right? Just feels like i'm missing something here. I'm very new to the whole limited company / contracting business too.

  5. #5

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    Quote Originally Posted by bhavic View Post
    I'm still confused as to what the difference is between some random umbrella company and my company. The umbrella company is also 'promising' to pay the NIC etc and would be the same as me, right? Just feels like i'm missing something here. I'm very new to the whole limited company / contracting business too.
    The only way the umbrella company can pass funds to you is through PAYE and legitimate expenses. If you have your own ltd company, you can keep money back to level out periods of low and high income, you can declare dividends that don't attract NI, you can have the company directly pay for certain things etc. etc.

    Previously, if they paid your company gross on an IR35 caught contract, and you didn't treat it as IR35 contract, HMRC would come after you. No risk for the agent. Now, for public service contracts, HMRC will go after the end client (the NHS or whomever). The only way the end client can be sure that you're paying (ahem) "The right amount of tax", is to make you go through a brolly. If the money goes through a company which you have significant control over, and then you're naughty, the end client is liable. Not you.
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  6. #6

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    Any NHS Trust that has applied an (arguably illegal but HMRC approved) blanket assessment as to IR35 status is likely to be looking for the use of a "complaint" umbrella.

    In other words a company of some standing and presence with a history of deducting PAYE from ALL payments.

    As such many will be using agencies who have told the NHS that they have a PSL of such compliant umbrellas.

    I suggest that your Ltd Co is not on that PSL.

    It is a sad fact that there have been many companies in the past who have stolen the clothes of "compliant umbrellas" and have instead used a form of loan or share based tax planning that very clearly does not subject all monies passing through then, to PAYE.

    In the public sector, a failure of a false umbrella could result in the NHS picking up the tax and NIC cost. They are rightly therefore taking suitable steps to protect themselves.
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  7. #7

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    Ah that makes more sense - So technically there isn't a difference at all, but they're just looking for someone which is reputable and somehow promises to deduct the appropriate PAYE tax.

    So I can tell my other half to try push for using my company as the umbrella but if the agency refuses, then she'll unfortunately have to go through one of the ones they've recommended (MyPay).

    Absolutely ridiculous!

    Hopefully she'll find private work instead, and then we can just use the same company and she can become a shareholder to be more tax efficient !

    Thanks for the detailed explanations

  8. #8

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    Which other ones do they recommend? I hope Mypay take more care of their employees than they do their website.

    Copyright 2012 (web design clearly a decade or two before then, and those smiling people pictures... just rank.)
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  9. #9

    More time posting than coding


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    Or potential kick back from the umbrella from introducing a new employee?

  10. #10

    Fingers like lightning

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    Quote Originally Posted by bhavic View Post
    I'm still confused as to what the difference is between some random umbrella company and my company. The umbrella company is also 'promising' to pay the NIC etc and would be the same as me, right? Just feels like i'm missing something here. I'm very new to the whole limited company / contracting business too.
    Your PSC / Ltd company is the intermediary closest to the end client at this point and therefore the end client would have to make all of the PAYE and NI deductions at source, which they won't want to do I guess, in order for her to get paid. If the end client can do this, then yes they can make the net payment to the Ltd company - but this is a long shot!
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