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    Default New to contracting and umbrella companies

    I`ve spent most of my life as self employed or as a director so know very little about being a contractor ,I recently started working for an agency and had my first pay slip , surprise surprise I got a "Margin" charge and also had my employers part of my NI stopped out of my payment , I guess this is normal? ,

    I only signed the contract last week so do I get the 14 day cooling off period? and then can I go self employed ?

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    Quote Originally Posted by Johno View Post
    I`ve spent most of my life as self employed or as a director so know very little about being a contractor ,I recently started working for an agency and had my first pay slip , surprise surprise I got a "Margin" charge and also had my employers part of my NI stopped out of my payment , I guess this is normal? ,

    I only signed the contract last week so do I get the 14 day cooling off period? and then can I go self employed ?
    Perhaps more research is needed...? Since you are not an employee of anyone else, who do you suppose is going to pay off your ERNICs? And umbrellas have a living to earn as well, surprisingly. Plenty of stuff around that would have explained all this over there --->

    But the quick answer to your question is "probably not", since (a) you have a contract in place, (b) if it[s not in your contract there isn't a cooling off period (I believe that is Sales of Goods Act stuff and so irrelevant but ICBW) and (c) you probably won't be able to work as self-employed due to the rules around transfer of debts on taxation.
    Blog? What blog...?

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    Regarding NI , my payslip show me paying twice , both my NI and the employers NI contribution , I queried this and was told:

    " Within Umbrella payroll scheme the employers NI is factored into your hourly rate and your hourly rate is inflated taking this into consideration. If the agency was able to pay you directly as straight PAYE your hourly rate would be less."

    So in reality I`m not getting the hourly rate I was offered.

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    Quote Originally Posted by Johno View Post
    Regarding NI , my payslip show me paying twice , both my NI and the employers NI contribution , I queried this and was told:

    " Within Umbrella payroll scheme the employers NI is factored into your hourly rate and your hourly rate is inflated taking this into consideration. If the agency was able to pay you directly as straight PAYE your hourly rate would be less."

    So in reality I`m not getting the hourly rate I was offered.
    Welcome to reality. The umbrella merely ups your charged rate to the agency to cover off the ErNIC overhead (and in effect the agency passes this on to the end client). If you're getting the rate you agreed - that's the gross amount, not net - then you have nothing to complain about.
    Blog? What blog...?

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    More time posting than coding

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    Quote Originally Posted by Johno View Post
    I only signed the contract last week so do I get the 14 day cooling off period? and then can I go self employed ?
    If you signed the contract then I would suggest reading it again - there will more than likely be a notice period involved. Plus if you gained the work via a recruitment agency, realistically you cannot simply go back to self-employed status.
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    Quote Originally Posted by Johno View Post
    ---
    So in reality I`m not getting the hourly rate I incorrectly thought I was offered.
    Fixed that for you.

    The fee the client pays is all the client pays. The client pays not a penny more than that. All the costs are yours. If you work for an umbrella company, all the costs come out of your fee. EENIC, ERNIC, PAYE, Holiday pay, Sickness pay, Umbrella admin fee, expenses.

    If you work for your own limited company it's the same - but you can mitigate some of the costs.
    Fact check: Mostly false

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    Quote Originally Posted by NotAllThere View Post
    Fixed that for you.

    The fee the client pays is all the client pays. The client pays not a penny more than that. All the costs are yours. If you work for an umbrella company, all the costs come out of your fee. EENIC, ERNIC, PAYE, Holiday pay, Sickness pay, Umbrella admin fee, expenses.

    If you work for your own limited company it's the same - but you can mitigate some of the costs.
    I appreciate the Umbrella companies have to make money but I dont believe its right to make me pay the employers NI contribution , glad its short term as they will be getting a two fingered salute and it will be back to being self employed for me.

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    eek
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    Quote Originally Posted by Johno View Post
    I appreciate the Umbrella companies have to make money but I dont believe its right to make me pay the employers NI contribution , glad its short term as they will be getting a two fingered salute and it will be back to being self employed for me.
    As others have already said you can't be self employed and use an agency. To work for an agency you can only use their payroll (if they offer that service), an umbrella or a limited company.
    merely at clientco for the entertainment

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    Quote Originally Posted by eek View Post
    As others have already said you can't be self employed and use an agency. To work for an agency you can only use their payroll (if they offer that service), an umbrella or a limited company.
    On my initial contact with the payroll company I was asked :

    "We have been asked today to email you to complete registration. In order to send the correct paperwork to you please advise if you are self-employed for payment and have a UTR number or if you usually do Umbrella payroll and submit expenses on a weekly basis? "

    I did not want the hassle of going self employed at the time but with the benefit of hindsight I guess I would be financially better off ?

  10. #10

    More time posting than coding

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    Quote Originally Posted by Johno View Post
    I did not want the hassle of going self employed at the time but with the benefit of hindsight I guess I would be financially better off ?
    Might be worth reading this page night help explain:
    "If you are registered as a sole trader and you find work through a recruitment agency, they won’t be able to deal with you in your capacity as a self-employed person under Section 134 of the Income & Corporation Taxes Act 1988."
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