umbrella company

UK PROFESSIONAL DRIVERS FORUMS THE UK PROFESSIONAL DRIVERS FORUM (INTERACTIVE)
41

tmcassett:
No its not swings and roundabouts in regards of your holiday and sick pay, they are not held back, they are simply added on top of what you earn if your PAYE

Maybe im thinking about it all wrong then. In order to get holiday pay and sick pay not added on top of my wages I need to be PAYE? Of which I’ll earn less every week anyway. I get less every week to ensure I get paid when I take a week off? Sorry,not seeing any difference there.

tmcassett:
Also just because someone’s been to university does not automatically mean their opinion on something is true and correct.

I know it does not make their opinion any more correct,everyone is entitled to an opinion, but I am however more likely to trust an accountants opinion regards taxation etc than someone who is not. I have no idea how clued up on the laws people on this forum are. Anyone can quote figures and calculations but until I have seen credentials I will lean towards the person I trust more.

tmcassett:
Exactly what hassle would that be then

The extra hassle involved is all the other stuff that is neccessery. You have not mentioned all that you have had to set up regards the law for agency workers. Are you SURE you’ve covered everything? It may only take 15 minutes “because your organised” but I don’t see how it can be that easy. My wife is SE (website designer) and it does not take 15 minutes to do her tax returns. Organised or not.

tmcassett:
I can negeoiate my own pay rates (obviously within reason) and the fact that its more than the measly £1 per hour offered by agencies

Extra £1 on top of what? Im on AT LEAST £4 p/h more than full time jobs are offering. Do you mean going to companies direct and by passing the agency altogether? Because that would actually be worth considering,if possible

But it’s not as simple as just setting up a ltd company and missing out the middle man. There are other stuff involved due to the law change,as I already mentioned. At least with the umbrella company they deal with it all in one go each week and I don’t need to bother about it. I appreciate what you are saying regards to having more in my bottom line each week but to me it does not offset the headache that comes with it.
I appreciate what you are saying but like you say,Im happy with what im paying for the service I get. I come and go with driving. I work for a few months,then take 4-5 month’s off. That’s why im agency. So I can pick up and stop when ever I choose. Having a ltd company causes problems that are not worth it for the short times I am doing it.
Don’t get me wrong,I appreciate everything your saying. I am especially looking forward to your answer regards the extra £1. If it IS going direct & missing out the agency altogether (something I had not thought about) then I will deffo consider that.

42

shake:

iankav:
Been with a few umbrella co’s,Numbermill are by far the worst,sure there some kind of fiddle set up by Milestone.Won’t use umbrella co’s again after Numbermill,deductions were 33%!!
Limited company is the best way.

Hi iankav

Don’t know where you were with Milestone but they where in Burtons, Gilmoss when I was there. Pertemps where also in Burtons and that was a fair job, Pertemps, I thought, where ok and the pay was better than most.

Yes mate been in there,decent job.They’ve got Freightliner in Garston as well.

43

They kept trying to get me into Freightliner but containers is one of the only things I have never done.

Snowman

If you are happy on Umbrella then good for you. Most people don’t get any/much benefit because they only get an extra £1.50 or so per hour. If I could get £4 per hour extra, like you, then I would jump at it. Next time I am at Morrison’s Belshill the coffees are on you??

44

shake:
Next time I am at Morrison’s Belshill the coffees are on you??

Lol :smiley:

shake:
They kept trying to get me into Freightliner but containers is one of the only things I have never done.

Container work is a piece of cake. Remember your twist locks when getting a box put on or taken off and take a paper for 3-4 hour tips and unloads!

45

shake:
They kept trying to get me into Freightliner but containers is one of the only things I have never done.

Snowman

If you are happy on Umbrella then good for you. Most people don’t get any/much benefit because they only get an extra £1.50 or so per hour. If I could get £4 per hour extra, like you, then I would jump at it. Next time I am at Morrison’s Belshill the coffees are on you??

Doddle mate.Easy to get your head round the skellies and clean and easy work.Stobarts at Widnes is sound and they’ll run through the skellies with you.

46

I got offered a umbrella job a while ago and laughed in the fellas face telling him I was PAYE with my ltd company. The fella wasn’t very impressed as he had to pay me the full wage up front with no deductions.

To me umbrella company’s are a tax dodge and before you go so are ltd peeps, I’m fully PAYE with hrmc on my company and all above board, pay the tax and NI when they are due the same as anyone else.

The same as the scam with construction workers I wouldn’t touch an umbrella outfit with a rotten carrot!!

47

tmcassett:
for every £20 I charge in VAT £9 goes into my pocket

Hi Tmcassett
Do you not mean for every £20 you charge in VAT £10 (£11 in your first year of flat rate VAT) go’s into your pocket, has i understand it drivers pay 10% VAT with a 1% reduction in there first year ie 9%.

Regards,
Jeff. :sunglasses:

48

alix776:
For what the umbrella companies are charging you co go full se and get better benefits. Its not much more work unless you go for vat and that’s not really that hard to do. There’s lots of invoicing apps about on all pc and mobile phones. So invoicing customers is easy. For some reason allot of agencies don’t like fully ltd and prefer you to use there umbrella scam (scheme) its this reason all my work is direct to companies

This, of course is the big misleading thing about “being self-employed”. The “benefits” you get are from HMRC rather than the yard dishing out the work, or the umbrella firm charging you a commission to be work-placed there. Once you take the HMRC allowances out of the equation, you see how really bad “Self-Employed” actually is in terms of the lack of actual real benefits that remain.

(1) You’ll pay double the national insurance as on PAYE, because you’re paying the “employers” stamp as well as your own. So much for being SELF employed.

(2) You might be able to invoice for the extra £1 per hour, but you’re forfeited both Holiday pay and Sick pay for that. Decent PAYE agencies will pay you 12.07% of your gross pay into a holiday pot for you, that’s your money from day one, and doesn’t dwindle away over the course of the weeks you work less than 6 days per week. INDECENT firms will give you so-called “holiday pay” based on the average hours per week over the past 13 weeks. Thus, the holiday pay drops away if you’ve had any days off at all during that period beyond working 5-6-5-6 flat out all the time. Of course, when the work goes quiet, you’ll not be told in advance that the “next fortnight has no work pal” - so you’ll see a big drop-off in your attempted holiday claim because you won’t be putting in for it at the start - but at the end of the holiday! Overall, you’ll get paid less than anticipated, and you’ll NOT be able to take holidays when YOU want “Hey we’re really busy pal - can’t you leave it 'til January when you’ll be laid up a bit?” In reality, to maximise holiday pay - you need to work 6-5-6-5 over the 13 weeks, then take exactly ONE week off, before going flat out another 13 weeks… The average hasn’t had time to “drop away” that way.
Alternatively, you can find a decent firm that just pays the 12.07% premium into a cast-iron pot. :sunglasses:

(3) If you have an accident, take ill, or just don’t feel like working on any day - you’ll be shown the door, and that’s it. No money at all for the entire period you are off. “Insurances” don’t cover you for much, and often have an excess. Eg. If you get hospitalised, you get paid from day 6 of your hospital stay. Even if you have your appendix out, you’ll be out in 4 days, thus this insurance is unlikely to ever be successfully claimed against.

(4) Damage excess - You’ll be told that any such damage can come out of your own insurances. It’ll be taken out of your invoice meantime though, whilst you flap about trying to find some other way of covering £500-£1500 for even “minor damage” :angry: Devent firms will cover such things with their own insurances. THIS is a good safety net if you can get it.

There’s not many ways you can go to work, work hard, and end up close to bankruptcy at the end of it.
Umbrella that is chargable is NEVER going to be worth the money, and even a “free” umbrella payroll system lacks in the Sick Pay department as far as I know.
The vast majority of firms out there will sell you the idea of “umbrella” on the basis that “You’re a bod who wants to work 5-6-5-6 all the time, thus minimising their takeout as a percentage”

I’d argue it’s barely worth it - even if you are that flat out all the time.

49

The-Snowman:
I was on the books of Driver hire East kilbride for a while for class 2 work. Was a specific contract so was consistent work. Once the contract ended I didnt get a lot from them however and ended up leaving. Things have changed now though,so they may well have more shifts and better wages now a days.
As for the whole umbrella company thing,it has something to do with the law changing regarding how offshore workers are paid and it has inadvertantly affected agency workers. I THINK. If anyone knows otherwise,let us both know! :smiley:
What I will say though is that should you go down this route,you will be much better off each week in wages than with PAYE. The accounting firm will deal with all wages and work out your tax,expenses etc. You dont need to worry about it. I do agency work this way and I will not go back to PAYE

so the job you were doing with Driver Hire and the work you’re doing now that pays £4hr extra are 2 separate things?

Driver Hire has it’s own umbrella company, they offer £1 an hour extra going through umbrella, barely makes a difference once you pay the admin fee and the employers NI payments, this is what I think the OP is talking about.

is the £4 an hour extra being offered to you from a different agency or is this still Driver Hire?

50

Wrong I don’t pay any NI or tax I only pay corperation which the company pays and this is much less than i would pay if I was paye even after the accounts fees. Damage exess that’s a con the agencies use I don’t have it and don’t need it.

3 I took Wednesday night off at short notice as I was unwell. This is one of the benefits of being direct they understand these things can and do happen

And its way more than £1 per hr more and its very worth while.

51

daffyd:
so the job you were doing with Driver Hire and the work you’re doing now that pays £4hr extra are 2 separate things?

Driver Hire has it’s own umbrella company, they offer £1 an hour extra going through umbrella, barely makes a difference once you pay the admin fee and the employers NI payments, this is what I think the OP is talking about.

is the £4 an hour extra being offered to you from a different agency or is this still Driver Hire?

Yes its totally different. I was with driver hire about 4 years ago,before umbrella companies came about. Can’t remember wage exactly but it was in the £7 p/h bracket. Im with a totally different agency now that pays about £8-9 p/h PAYE and £12.50 P/H SE. Obviously it depends on what client as it varies but the one I mainly do work for pays the higher rates

52

alix776:
Wrong I don’t pay any NI or tax I only pay corperation which the company pays and this is much less than i would pay if I was paye even after the accounts fees. Damage exess that’s a con the agencies use I don’t have it and don’t need it.

Hi alix

I do not know enough of your situation to make comment on you but in general you need to look at (amongst other things) your state pension in regard to not paying any NI contibutions.

If you don’t pay any NI (employees) then it could reduce your state pension. The rules keep changing. At one time you needed 40 years of “stamps” then down to 30 and now I think ■■ 35. Have you got those years in?. if not then maybe you could consider paying PAYE through your Ltd Co. on a low wage/high dividend basis to avoid jeopardising your state pension as well as keeping Tax & NI expenses to a minimum.

For example if your Ltd Co. paid you as an employee £154 per week then you would likely pay no tax and any unused tax allowance could be used later. On £154 per week your NI contributions (normal worker) as a worker would be approx 12 pence per week and your employer NI (company expense but yours in the end) would be approx 14 pence per week. So for that week you would get a NI credit at a cost of approx 26 pence per week.

Any further money you would like to pay yourself could be paid as dividends and be free from NI but subject to tax at your rate.

If you take any money from the company it would not be corporation tax. Corporation tax is paid on the Ltd Co profits at year end and those taxed profits would be carried forward to the next accounting period. Any money taken as wages (PAYE) or dividends reduce the Ltd Co profit so reducing the corporation tax. If you take all your profit (wages and/or dividend) then the corporation tax would be zero.

Of course you could also take a directors loan but these are subjected to the “Bed & Breafasting” rules. and while you may get away with improper use of a directors loan account you still need to check the regulations for your particular case.

Your Ltd Co could pay you as a self employed contractor to the company but I think you would fall foul of the IR35 rules and in any case most drivers would fail the IR 35 rules and the only reason that they get away with it is because HMRC is understaffed.

You also need to be aware of the various HMRC rules for various payments. For example your Ltd Co cannot pay you a dividend if the company did not have the reserves to meet the dividend bearing in mind all current liabilities including but not restricted to VAT and any other taxes.

Also the Ltd Co cannot pay a dividend unless you call a board meeting (with yourself) and document in the minutes the award of the dividend. Finally you then need to issue yourself with a tax voucher. Failure to show HMRC that you have complied with these rules may make the dividend illegal and so be treated as wages and therefore subject to a near 26% NI bill as well as the income tax.

This is all long winded. I am no expert and you may think this does not apply to you but if in doubt seek advice.

53

I do think there is a lot of confusion about being “self employed”.

Usually when you use a Ltd Co then you are an employee and/or director of that Ltd Co.

Just being the owner/director of the Ltd company does not make you self employed.

Likewise when you work through an umbrella you are not self employed but an employee of the umbrella co (in most cases).

Lorry drivers have never fitted the profile of genuine self employed as per the HMRC web site.

If you incur expenses in any capacity then you can claim relief and HMRC will make a decision . Do it right and sleep at night.

54

As a co director your tax position is different and paye just doesn’t apply at all. Umbrella schemes are totally different again with regards to a persons tax position as they are treated as an employee of the ltd company they have been set up as. Where as fully ltd your treated as a director for tax purposes.

Shake that’s why I pay a small fortune a year to an accountant to sort it all out and make sure its all above board

55

shake:
. Any money taken as wages (PAYE) or dividends reduce the Ltd Co profit so reducing the corporation tax. If you take all your profit (wages and/or dividend) then the corporation tax would be zero.

.

You are wright in saying that corporation tax is payable on the company’s profits after wages are taken out but Dividends are payed after corp-tax is deducted.
Regards,
Jeff. :sunglasses:

56

Alix

It is common for directors to be paid as a mixture of PAYE and dividend but the NI contibutions for directors are treated slightly different. A Ltd Co can pay the director as PAYE (RTI) over the course of the tax year and make final amendments on the last pay date.

There are different ways that people do things and as you have an accountant then all is good for you.

Jeff

I agree with you that dividends are paid after CT but what I was trying to say in a short as way as possible is that you can take dividends along the way (subject to the Ltd Co being solvent) ie before the year end final CT calculation.

At the end of the day all people with a Ltd Co would be advised to seek help (usually an accountant) and all I am trying to do is show that setting up and running a Ltd Co has a lot more to it than some folk realise when they first set up and then end up in a big mess.

I would never suggest that a person should follow any advice on public forums without checking first. I also think it is wrong that the authorities will let any person set up a Limited Company with little or no knowledge of company finances just for a £15 fee and then come down hard on that person for not following all of the many rules and laws.

If I had my way I would rather be PAYE and not have any of this “extra hassle” or expense but some agencies I have dealt with are no longer taking people on as PAYE.

57

shake:

alix776:
Wrong I don’t pay any NI or tax I only pay corperation which the company pays and this is much less than i would pay if I was paye even after the accounts fees. Damage exess that’s a con the agencies use I don’t have it and don’t need it.

Hi alix

I do not know enough of your situation to make comment on you but in general you need to look at (amongst other things) your state pension in regard to not paying any NI contibutions.

If you don’t pay any NI (employees) then it could reduce your state pension. The rules keep changing. At one time you needed 40 years of “stamps” then down to 30 and now I think ■■ 35. Have you got those years in?. if not then maybe you could consider paying PAYE through your Ltd Co. on a low wage/high dividend basis to avoid jeopardising your state pension as well as keeping Tax & NI expenses to a minimum.

For example if your Ltd Co. paid you as an employee £154 per week then you would likely pay no tax and any unused tax allowance could be used later. On £154 per week your NI contributions (normal worker) as a worker would be approx 12 pence per week and your employer NI (company expense but yours in the end) would be approx 14 pence per week. So for that week you would get a NI credit at a cost of approx 26 pence per week.

Any further money you would like to pay yourself could be paid as dividends and be free from NI but subject to tax at your rate.

If you take any money from the company it would not be corporation tax. Corporation tax is paid on the Ltd Co profits at year end and those taxed profits would be carried forward to the next accounting period. Any money taken as wages (PAYE) or dividends reduce the Ltd Co profit so reducing the corporation tax. If you take all your profit (wages and/or dividend) then the corporation tax would be zero.

Of course you could also take a directors loan but these are subjected to the “Bed & Breafasting” rules. and while you may get away with improper use of a directors loan account you still need to check the regulations for your particular case.

Your Ltd Co could pay you as a self employed contractor to the company but I think you would fall foul of the IR35 rules and in any case most drivers would fail the IR 35 rules and the only reason that they get away with it is because HMRC is understaffed.

You also need to be aware of the various HMRC rules for various payments. For example your Ltd Co cannot pay you a dividend if the company did not have the reserves to meet the dividend bearing in mind all current liabilities including but not restricted to VAT and any other taxes.

Also the Ltd Co cannot pay a dividend unless you call a board meeting (with yourself) and document in the minutes the award of the dividend. Finally you then need to issue yourself with a tax voucher. Failure to show HMRC that you have complied with these rules may make the dividend illegal and so be treated as wages and therefore subject to a near 26% NI bill as well as the income tax.

This is all long winded. I am no expert and you may think this does not apply to you but if in doubt seek advice.

Indeed. Yet another armchair expert giving out poor and wrong advice.

58

Shake its simples keep all receipts. And invoices send them to accountant along with your bank statements and cheque book. Couple of things to sign its simple nothing complicated about it at all
Many have said on here before jumping in see an accountant and that goes for setting any business up

59

shake:
Alix

It is common for directors to be paid as a mixture of PAYE and dividend but the NI contibutions for directors are treated slightly different. A Ltd Co can pay the director as PAYE (RTI) over the course of the tax year and make final amendments on the last pay date.

There are different ways that people do things and as you have an accountant then all is good for you.

Jeff

I agree with you that dividends are paid after CT but what I was trying to say in a short as way as possible is that you can take dividends along the way (subject to the Ltd Co being solvent) ie before the year end final CT calculation.

At the end of the day all people with a Ltd Co would be advised to seek help (usually an accountant) and all I am trying to do is show that setting up and running a Ltd Co has a lot more to it than some folk realise when they first set up and then end up in a big mess.

I would never suggest that a person should follow any advice on public forums without checking first. I also think it is wrong that the authorities will let any person set up a Limited Company with little or no knowledge of company finances just for a £15 fee and then come down hard on that person for not following all of the many rules and laws.

If I had my way I would rather be PAYE and not have any of this “extra hassle” or expense but some agencies I have dealt with are no longer taking people on as PAYE.

Hi Shake
I appreciate your input i like to read anything to do with running a LTD co as do a lot of members on this forum do judging by the amount of Ltd related threads, i have an increased interest after incorporating my own in September this year.
Befor i go any further would like to stipulate that anyone reading information that is posted on forums about your legal obligations on operating a business Should Take Council With an Accountant.

That said i for one would like to do my own accounts, payroll & vat I fined some strange possibly sadistic pleasure in doing so before handing over the books at the end of the year to my accountant & i think that for someone going down the Ltd rout they should at least have a basic understanding of how a company works.

Regards,
Jeff. :sunglasses:

60

YorkshireJeff:

tmcassett:
for every £20 I charge in VAT £9 goes into my pocket

Hi Tmcassett
Do you not mean for every £20 you charge in VAT £10 (£11 in your first year of flat rate VAT) go’s into your pocket, has i understand it drivers pay 10% VAT with a 1% reduction in there first year ie 9%.

Regards,
Jeff. :sunglasses:

Hi Jeff

Yes sorry your right, It had been a long week and I was on my 4th glass of the falling over juice when I wrote that so my head was a little scrambled and I got the example the wrong way around with the figures.