Not used tax free allowance - advised Umbrella

[LisaContractorUmbrella]

Thanks for the advice everyone. I know ultimately it's down to me - I should have read the contract properly and done the addings up before signing anything. I'm just a bit annoyed as it seems the recruitment agent has benefited out of this. I told him I wanted £23 per hour which he said I would be earning, yet he declined to mention the fact I'd have all these "costs" deducted from it!!

The FaQQer: The reason I'm not claiming expenses is because I was told the expenses were deducted from the overall amount of tax payable, hence as I'm not paying tax, there's nothing to deduct from. Are you saying the Umbrella company should be paying my expenses, regardless of tax?

Thanks in advance

The umbrella company could process the expenses but as you are paying no tax there would be no tax relief to be had

[beckiboo]

Thanks for the advice everyone. I know ultimately it's down to me - I should have read the contract properly and done the addings up before signing anything. I'm just a bit annoyed as it seems the recruitment agent has benefited out of this. I told him I wanted £23 per hour which he said I would be earning, yet he declined to mention the fact I'd have all these "costs" deducted from it!!

The FaQQer: The reason I'm not claiming expenses is because I was told the expenses were deducted from the overall amount of tax payable, hence as I'm not paying tax, there's nothing to deduct from. Are you saying the Umbrella company should be paying my expenses, regardless of tax?

Thanks in advance

[TheFaQQer]

I was sent all the contract details via email which I then signed. To my detriment I didn't read all the pages fully and now it's come back to haunt me.

There's the first lesson - read and understand what you are signing. If you don't understand it, ask someone who does (not necessarily the agent or umbrella company!)

I worked 3 days on my first week earning £472 gross. I got paid for those days on Monday and to my horror I'd been charged £130 "fees" - bear in mind I'm NOT paying tax so don't claim any expenses back.

Why are you not claiming expenses back? If you were working for a consultancy under the same situation, would you pay all your business expenses yourself, or expect to be reimbursed by your employer?

Do I have to agree to this 2 week notice period?

If it's in the contract that you signed, then yes. If it isn't, then no.

Can I complain to my recruitment agency about the way this has been handled? I feel I've been made a fool of here, ending up paying a hell of a lot more than I would ever have agreed to.

You can complain, but I doubt that will have any impact whatsoever. You made the decision to join that umbrella, you signed the contract, you should have asked what the fees were. I don't think it's a reasonable assumption that the agency should know exactly what the terms of a third party are - just because the agency were recommending them doesn't mean that they know what you are going to agree with the umbrella.

[LisaContractorUmbrella]

You should have been advised by the umbrella company about the way that they work - this applies to all umbrella companies. Basically they sign a business to business contract with the recruitment agency; in that contract there will be an agreed contract rate and this is the rate at which the umbrella company will raise invoices to the agency. Payment will then be made to the umbrella company who, as your employer, is legally responsible for making payment to HMR&C for Employer's National Insurance contributions so this amount will be deducted from the funds received from the agency. The umbrella company will also retain an amount from the funds received which is their margin. What is left is your salary and is subject to full PAYE tax which means deductions for income tax and for employee's national insurance will be made.

All umbrella companies make a deduction for holiday pay in order to be able to comply with the EC Working Time Directives which banned the use of 'rolled up' holiday pay i.e. where it is assumed that a proportion of your salary will be for holidays taken at any point but this money will be paid back to you when you take holiday or when you leave the umbrella company's employment.

Deductions for childcare vouchers should have been agreed with you when you signed the employment contract otherwise the deduction is unlawful - this would also apply to postage although I cannot see why such a deduction would be made.

With regard to being better of as self-employed, this is not necessarily the case - the recruitment agency would not deal with a sole trader and there would only be any real financial benefit from forming a Limited Company if your working practises put you outside IR35, otherwise your taxes paid would be the same as through an umbrella company to all intents and purposes.

HTH

[beckiboo]

Hi everyone

Newbie to the board here, and newbie to contracting!!

I've recently returned from a year travelling abroad. This means I haven't yet used up any of my £8k tax free allowance.

I've been recruited into a contract role to which I had planned on being self employed and submitting my own tax returns etc. However, I was pretty much steamrollered into joining the Umbrella company (Go Umbrella) by the recruitment agent. It was a very fast turnaround, I was fresh back from travelling and he assured me it would be the easiest and most cost efficient way of getting paid. He said charges would be about a "tenner a week", which I thought was fine.

I was sent all the contract details via email which I then signed. To my detriment I didn't read all the pages fully and now it's come back to haunt me.

I worked 3 days on my first week earning £472 gross. I got paid for those days on Monday and to my horror I'd been charged £130 "fees" - bear in mind I'm NOT paying tax so don't claim any expenses back.

The fees consisted of:

£27.50 admin fee
£63.50 employee costs (Employer's NI, postage, childcare vouchers etc!)
£15 holiday fees
£26 National Insurance

Leaving a net pay of £339

After all the deductions it turns out I would have been a LOT better off being self employed and submitting my own accounts. I'm pretty annoyed really with the recruitment agency for almost forcing me into signing up with the Umbrella (of course I now realise there were probably comission fees paid for referring me).

I have emailed saying I won't be using them anymore, to which they now say I have to give them 2 week's notice. This was in the contract which I signed.

Can anyone advise me on my situation? As I am not earning over £8k this tax year, should I be liable to pay my "employee costs" of which mostly consists of the Employer's NI?

Do I have to agree to this 2 week notice period?

Can I complain to my recruitment agency about the way this has been handled? I feel I've been made a fool of here, ending up paying a hell of a lot more than I would ever have agreed to.

Thanks for any advice. Please bear in mind I've only been contracting for a week so go easy!