Umbrella company? Confused!!?

Question

Im meant to be starting a new job on monday for RM, As a audio & visual techician.

Im employed by a agency called Synax on behalf of RM, They have advised me to be paid through their Umbrella Company, As its better than been paid through Paye, Im abit confused as what the Umbrella company does, They said something on the phone about paying less tax & NI, I dont understand, How could i be better off with having to pay them a fee (£15) Also says they take £17 a weeks for holidays/sick pay :-s

Could do with someone explaining it a bit better as it isnt clear on the contract they sent me.

http://www.paramountbusinessservices.com...

Thats the company, I will be calling them on monday about it, Because there not open at weekends.

Answer 1

This sounds to me like a company that doesn,t want to face up to it's legal obligations on employment laws that are in place for your protection. You could find that you have no legal right to sick pay, holiday pay or redundancy pay and could be sacked at a moments notice.  Be careful.

Answer 2

Umbrella company can be the parent company of the company that you are actually working for, the major shareholder of the company that you are actually working for (if it's a joint venture).

What you need to understand is what are your rights/ benefits (long run & deferred benefits) & whether your employment contract is actually with the Umbrella company or the company that you are actually working for. That's more important because the labour law protection for you will be based on where does that company registered/ incorporated (country & county)  not where you received the money from.

Answer 3

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Answer 4

Be very careful.  A law came in last April to stop the use of "Umbrella Companies" and depending on how they operate, it could well be illegal (if they tell you you are a shareholder rather than a director, then it is against the law).

There are tax benefits to being paid through a limited company (as you incur tax with being paid through dividends rather than salary and you can reduce your tax liability by claiming for work-related costs), but you are NOT entitled to paid leave, sick or maternity pay (which gives me the impression these guys operate something very strange if they say you can still get paid for leave), and you will have a large tax bill at the end of the year that will need to be paid up.

I would always advise being paid through PAYE.  It may well not be the most profitable way, but it is by far and away the safest option.

Answer 5

Yes it is complicated, I worked via an umbrella group for many years before I retired, it's difficult to work it all out.

                            I'll have a go at making it simple;

The umbrella group keep in touch with Inland rev' on your behalf, all paper work etc, so no worries there.

                 The will also say that you are self employed and they will be able to prove it.

                    You will not be working for your company, your company will pay your salary to their parent company, without any stoppages'

                         The parent company will pay you that money into your bank account, minus deductions.

                            These deductions will be , their fee,( I was paying £16 per week)!

                                 They  will pay your income tax &NI based on whatever  income  they say you are getting!  And send the balance to your own bank account!   For example I was earning around an average of £800 a week, my final cheque  was minus around £20 tax minus NI which was only a few pounds and minus their fee £16.

                                    Out of £800 I was deducted about £40 and all my paperwork was in order.

                                      I could claim expenses for wiping my nose just about anything, buying a car etc etc.

                                       Now work out what the average worker would shell out on that wage.

                                        The expences bit I could never really understand , but I didnt care.

                                          I was in that group 5 years £16 a week very well spent.

                                          I have obviously understated this system because it gets very complicated when Inland rev keep changing their rules in an attempt to combat this sort of thing, but the group deal with all that, it never affected me.

                                           You can get booklets on the subject from Inland rev offices, but I triedunderstanding one once, and binned it after the first 6 pages, it was gibberish!!

                                           Go for it is my advise.