Reply to: Newbie for only 3 months contract

[Matt FPSGroup]

Matt - so what's the difference between your Flex option and Agency option, which provide 2 differing take home figures? Or sorry, is this assuming that there is no uplift if they opt to go on the same rate via Agency PAYE?

Hi Lucy, the assumptions used for our basic online calculator state that a 15% uplift is used (see assumptions section under our calculator). The uplift therefore accounts for the differing take home values.

[lucyclarityumbrella]

Matt - so what's the difference between your Flex option and Agency option, which provide 2 differing take home figures? Or sorry, is this assuming that there is no uplift if they opt to go on the same rate via Agency PAYE?

[lucyclarityumbrella]

Lucy, have you ever encountered an recruitment agency that does payroll and offers an actual uplift over and beyond the Employer NI and holiday pay differentials to encourage people to use an umbrella instead?

The uplift is nothing to do with the umbrella really and is not something that a calculator is actually using in the calculation, it just makes it look confusing and like they are benefitting from something that isn't really there.

In simple terms, it is a case of asking what their daily or hourly rate is and then making sure that this is thoroughly explained to be their contract rate and not their taxable salary.

The uplift is something the agency should be offering as a difference between PAYE to umbrella to cover exactly as you say. Not sure it is something that is applied as "standard" talking to some contractors recently and the 15% is a sweeping assumption, as some contractors are now looking to up their rates to cover the expenses they can no longer claim, so this may vary dramatically dependent on the contractors circumstances.

[eek]

Our illustrator uses 15% as a relatively common amount that agencies we engage with choose. We are currently seeing an increasing number with significantly higher uplifts than that, which is absolutely fantastic for their contractors. A generic calculator needs to include some assumptions and we attempt to make those assumptions as explicit as possible. For the avoidance of doubt Eek, you are absolutely correct – where there is insufficient uplift, the worker will be worse off. This is something Unions have, quite rightly, been most vociferous about.

Given that I work in a slightly different industry I'm not aware of what lower end agencies do but I have never seen an agency that offers an uplift compared to going direct - most agencies avoid doing payroll full stop. I'll have a chat with my union and CAB mates and see if they've heard of such a thing... The one's I've usually seen are £140 payroll £160 via umbrella (for supply teachers). That £20 is of course eaten up by the Employers NI that then needs to be deducted..

Lucy, have you ever encountered an recruitment agency that does payroll and offers an actual uplift over and beyond the Employer NI and holiday pay differentials to encourage people to use an umbrella instead?

[Matt FPSGroup]

Lucy is absolutely right. The take home pay for every umbrella company should be almost identical. The only variations in umbrella company costs should be the administration fee, whether the company has reached its staging date for pension auto-enrolment and whether the company’s payroll bill is likely to exceed the apprenticeship levy threshold. The costs the agency would pay on PAYE would include all of these, with an additional amount for the actual cost of employing someone to administer the payroll. The uplift should be commensurate with their PAYE costs, but the specific level is entirely at the agency’s discretion.

Our illustrator uses 15% as a relatively common amount that agencies we engage with choose. We are currently seeing an increasing number with significantly higher uplifts than that, which is absolutely fantastic for their contractors. A generic calculator needs to include some assumptions and we attempt to make those assumptions as explicit as possible. For the avoidance of doubt Eek, you are absolutely correct – where there is insufficient uplift, the worker will be worse off. This is something Unions have, quite rightly, been most vociferous about.

Interestingly, the very Unions that were baying for umbrella company blood pre April 15 were also livid at the resultant restrictions to travel and subsistence and hence reduction in the take home pay of their members. It is now a stated pledge within Labour’s manifesto (page 51) that they will ban umbrella companies should they come to power. The result would be every contractor going onto agency PAYE and having to move their employment every time they changed agency. Contractors working for multiple agencies at one time will have multiple employments.

For the avoidance of doubt our basic website calculator is only intended as a rough guide and every contractor who works with us receives a personalised illustration based on their specific circumstances and their own agency’s uplift before they get paid for the first time. As with most umbrella companies there is no barrier to exit. There is no charge or penalty if the contractor feels they are better off on their agency’s own PAYE.

[lucyclarityumbrella]

Which makes it equally frustrating when we offer a calculator that makes only an assumption of the tax code, and people won't use us because they are being offered higher take home elsewhere

Let's reiterate NO umbrella can offer a higher take home than any other - only difference is the margin and the ability to be able to explain things transparently and honestly.

[eek]

Yes, you are correct. The mileage used in our calculations is specifically classified as Business Mileage which is on the job mileage excluding home to work travel.

Our online calculator states in its supporting text "HMRC regulations allow you to receive tax relief on business mileage so please add into the calculation if relevant. Note that business mileage does not include home to work travel."

So as you are ignoring my other comment you agree that that 15% uplift was a figment of your imagination and in reality that 15% is just the Employers NI and Apprenticeship levy that the agency would be paying regardless and that your umbrella is paying instead...

PS this is a sore point with many unions who dislike the tricks many (even legitimate) umbrellas have used to produce pay differentials to encourage people to use an umbrella where in reality the opposite was the case. And your calculator is a perfect example of that claiming an uplift that doesn't exist....

[northernladuk]

Oh.. Your appeal was successful??

[Matt FPSGroup]

That still leaves the question on why you imply that mileage expenses may be allowed when they have not been allowed since April 2015....

Yes, you are correct. The mileage used in our calculations is specifically classified as Business Mileage which is on the job mileage excluding home to work travel.

Our online calculator states in its supporting text "HMRC regulations allow you to receive tax relief on business mileage so please add into the calculation if relevant. Note that business mileage does not include home to work travel."

[eek]

FPS have been providing umbrella administration services since 1994. Whilst we have an office in the Isle of Man, the umbrella companies we administer are UK companies with UK banking arrangements – you could pick our office up and move it anywhere in the UK with no change to our services.

Do you believe that HSBC adhere to UK banking regulations, even though their administration is done in India? The same applies here. The umbrella company is a UK company that operates within the normal tax rules. FPS Group administer the company from the Isle of Man.

For the avoidance of doubt, we do not and have never operated an offshore tax avoidance scheme. Our services are standard umbrella, adhering to all relevant HMRC rules and regulations – without exception! That is why we are on the preferred/approved supplier lists for vast swathes of the largest agencies in the country. We meet (and often exceed) their compliance standards. If our solution had any offshore element, this absolutely would not be the case.

To clarify, the 15% uplift referenced is the average difference between what an agency would pay a contractor on PAYE and the rate they pay to an umbrella company. You will find this is standard across the industry.

We are proud of the umbrella administration service we provide and don’t feel the need to be cagey about our location, calculations or compliance.

So the 15% is some random figure with no basis in fact or reality and is mainly covered be Employers NI that should be being paid.... What percentage of Employers NI will whatever company is paying the umbrella user be paying - for reference the figure other companies including agencies will need to deduct is 13.8% (and another 0.5% for the apprenticeship levy).

That still leaves the question on why you imply that mileage expenses may be allowed when they have not been allowed since April 2015....

[Matt FPSGroup]

Freelance Professional Services is licensed by the Isle of Man Financial Services Authority - other companies licensed by them can be found within the HMRC Scheme Enquiries forum.

and your Take home pay caulcator(sic) talks both about a 15% uplift (whatever that is) offers mileage and quotes a rate that is higher than the agency direct. The words - "wouldn't bargepole with touch a" spring to mind....

FPS have been providing umbrella administration services since 1994. Whilst we have an office in the Isle of Man, the umbrella companies we administer are UK companies with UK banking arrangements – you could pick our office up and move it anywhere in the UK with no change to our services.

Do you believe that HSBC adhere to UK banking regulations, even though their administration is done in India? The same applies here. The umbrella company is a UK company that operates within the normal tax rules. FPS Group administer the company from the Isle of Man.

For the avoidance of doubt, we do not and have never operated an offshore tax avoidance scheme. Our services are standard umbrella, adhering to all relevant HMRC rules and regulations – without exception! That is why we are on the preferred/approved supplier lists for vast swathes of the largest agencies in the country. We meet (and often exceed) their compliance standards. If our solution had any offshore element, this absolutely would not be the case.

To clarify, the 15% uplift referenced is the average difference between what an agency would pay a contractor on PAYE and the rate they pay to an umbrella company. You will find this is standard across the industry.

We are proud of the umbrella administration service we provide and don’t feel the need to be cagey about our location, calculations or compliance.

[eek]

Hello, don't forget about us! Happy to help if you need us

Freelance Professional Services is licensed by the Isle of Man Financial Services Authority - other companies licensed by them can be found within the HMRC Scheme Enquiries forum.

and your Take home pay caulcator(sic) talks both about a 15% uplift (whatever that is) offers mileage and quotes a rate that is higher than the agency direct. The words - "wouldn't bargepole with touch a" spring to mind....

[TheFaQQer]

This is my first post. I have got a 3 months contract with the promise of getting permanent afterwards.

May I suggest a smidgen of sodium chloride?

[Matt FPSGroup]

Hello, don't forget about us! Happy to help if you need us

[Hobosapien]

Take a look at OrangeGenie.

Well done and good luck.

When I took a look they were charging a percentage fee rather than fixed fee per week/month. May work out cheaper if on a low end rate but for me it worked out at double. Er, no thanks.