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I'm completely new to these forums, and relatively new to contracting / freelancing but the issue of Umbrella Companies is one that I was hoping to get some help with.
Lisa - what would be the benefits of registering with yourselves?
Basically, all umbrella companies work in the same way so what you should be looking for is excellent customer service, transparency on their website, a good reputation and longevity in the market place. A good umbrella company should also make sure that you fully understand the way that an umbrella company differs to permanent employment before you register with them so look for informative articles on their website especially in relation to expenses and employer's NI. Any companies marketing their business based on 'take home pay' should be approached with caution as all UK umbrella companies should operate PAYE on all your earnings - a company promising 85% take home is unlikely to work in this way as income tax rates start at 20% and NI contributions at 12.8%.
Why should you register with us? Because we're good
right so my bf was contacted by an agency after seeing his cv online and offered him a 6 week contract £300 per day working 7 days a week
he decided to take the ob on as a stop gap as hes due to start a full time position but not for 3 months
he filled in all the forms and was told to register with an umbrella company as that is how they pay his wages between the agency and umbrella company this was all done for him and he was given log in details which he gave to me to keep an eye on
so the timesheet was submitted and viewable on his umbrella profile was invoiced to the client for 1225 plus vat 245
no his payslip went online and his take home pay was £762 !!!!
breakdown as follows minus the pennies
income to the company 1225
ni employers contributions 129
admin fee 1250
total available for salary 1083
tax 237
ni 83
paid to employee 762
does this not seem awfully steep ? forgive me if im wrong but should the agency not be paying his employers ni contributions ?
considering his annual pay this year is probably only going to be about 30k it seems that way
right so my bf was contacted by an agency after seeing his cv online and offered him a 6 week contract £300 per day working 7 days a week
he decided to take the ob on as a stop gap as hes due to start a full time position but not for 3 months
he filled in all the forms and was told to register with an umbrella company as that is how they pay his wages between the agency and umbrella company this was all done for him and he was given log in details which he gave to me to keep an eye on
so the timesheet was submitted and viewable on his umbrella profile was invoiced to the client for 1225 plus vat 245
no his payslip went online and his take home pay was £762 !!!!
breakdown as follows minus the pennies
income to the company 1225
ni employers contributions 129
admin fee 1250
total available for salary 1083
tax 237
ni 83
paid to employee 762
does this not seem awfully steep ? forgive me if im wrong but should the agency not be paying his employers ni contributions ?
considering his annual pay this year is probably only going to be about 30k it seems that way
Nope, looks reasonable to me (assuming he only worked 4 days and the umbrella fee is actually £12.50...).
Working through an umbrella you get taxed as an employee but Employer's NICs, are the contractor's liability, nobody else's. Welcome to reality.
right so my bf was contacted by an agency after seeing his cv online and offered him a 6 week contract £300 per day working 7 days a week
he decided to take the ob on as a stop gap as hes due to start a full time position but not for 3 months
he filled in all the forms and was told to register with an umbrella company as that is how they pay his wages between the agency and umbrella company this was all done for him and he was given log in details which he gave to me to keep an eye on
so the timesheet was submitted and viewable on his umbrella profile was invoiced to the client for 1225 plus vat 245
no his payslip went online and his take home pay was £762 !!!!
breakdown as follows minus the pennies
income to the company 1225
ni employers contributions 129
admin fee 1250
total available for salary 1083
tax 237
ni 83
paid to employee 762
does this not seem awfully steep ? forgive me if im wrong but should the agency not be paying his employers ni contributions ?
considering his annual pay this year is probably only going to be about 30k it seems that way
If you want to save the Er's NIC then you'll need to go down the Ltd Co. route - more admin but take home pay much better. It totally depends on your circumstances.
Assuming a daily rate of £300k, you'll have annual income of £69k (46 weeks) (plus £2.6k from the VAT flat rate scheme saving in the first year) accountant's fees would be only a little more than what you are paying the Umbrella. Assuming you withdraw all profits your net pay will look more like £4k per month (£51k annually).
If you income is likely to be at this level I would highly recommend going Ltd. If £30k then probably not worth it.
If you want to save the Er's NIC then you'll need to go down the Ltd Co. route - more admin but take home pay much better. It totally depends on your circumstances.
Assuming a daily rate of £300k, you'll have annual income of £69k (46 weeks) (plus £2.6k from the VAT flat rate scheme saving in the first year) accountant's fees would be only a little more than what you are paying the Umbrella. Assuming you withdraw all profits your net pay will look more like £4k per month (£51k annually).
If you income is likely to be at this level I would highly recommend going Ltd. If £30k then probably not worth it.
Andrew
Can I have a day rate of £300k.... please....
Seriously, it's reportedly a three month deal until he takes on a permie role, and it's clear they have no ideas about contracting anyway; so umbrella is the only viable option.
does this not seem awfully steep ? forgive me if im wrong but should the agency not be paying his employers ni contributions ?
The only question I would have is why the calculation is based off £300 including VAT rather than excluding VAT. I've not gone the umbrella route before, but when I agree a rate, that is excluding VAT.
If the rate discussed was VAT inclusive, then the calculator from contractor umbrella gives a net income of £753.87 which is pretty close to what you get.
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If the contract rate, as agreed in the business to business contract between the umbrella company and the agency is £300.00 per day then it would be usual for this rate to be plus VAT and not inclusive of VAT - other than that the figures seem OK. You should advise your friend that he cannot claim travel expenses whilst he's with the umbrella company as he will only be working on a single assignment whilst in their employment.
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