New to Umberlla and some questions.

[suezy]

The way you're used to working you'd get £8 an hour (say). The agency would charge the client £20 an hour, and they'd cover your holiday pay, pension and employers ernic out of the £12.

So for 24 hours of your work (under the old way), the agency charges client £480, pays £18 Employers NI, £15 Holiday, £2 workplace pension. And then pays you 8x24 = £192 + £14 for your expenses (approximate figures). They make ~£240 profit.

Now the agency charges the client £480 and pays the umbrella company £216. So the agency profit is now £264. They've also sacked an admin assistant as they no longer need to handle the payroll themselves. So they've made even more. If they're financially linked to the brolly company, then they're even more quids in.

You end up with less take home pay, as all those employment costs that used to come out of the client fee are now coming out of your fee. They may have sold you this way of working on the basis that your hourly fee is now higher... but as you can see they benefit, while your take home pay is much reduced.

Many thanks for your post, this help me understand what was going on

[LisaContractorUmbrella]

If you're IR35 caught, and prepared to take the risk that someone else can disappear with your money or can't be bothered to chase an agency if they don't pay you, then umbrellas can make sense whatever rate you're on

Oh such cynicism in one so young

[NotAllThere]

Oh such cynicism in one so young

Well, you would say that, wouldn't you.

[LisaContractorUmbrella]

Well, you would say that, wouldn't you.

Well we've been around for 12 years and not run off with anyone's money so yep

[TheFaQQer]

Well we've been around for 12 years and not run off with anyone's money so yep

There used to be a poster here who had had an agency and two umbrella's disappear with her money, IIRC. Can't remember her name, though.

[northernladuk]

There used to be a poster here who had had an agency and two umbrella's disappear with her money, IIRC. Can't remember her name, though.

Did she have the word unlucky somewhere in her username??

[NotAllThere]

Well we've been around for 12 years and not run off with anyone's money so yep

Ah, so just waiting until the pot is big enough.

[LisaContractorUmbrella]

Ah, so just waiting until the pot is big enough.

[NickNick]

There used to be a poster here who had had an agency and two umbrella's disappear with her money, IIRC. Can't remember her name, though.

I had an agency go bust on me years ago and it's not up there amongst my life's greatest moments. :O)

[moggy]

Hi guys many thanks for your answers it is really appreciated.

Is it legal for the agency to force me to use an umbrella company, just after all these things being taken out I am basically on min wage.

I surely would be better to invoice them each week for the work and they pay me direct and me pay any taxes due as self empolyed? no?

A £9 an hour limited rate is pretty close to min wage yes. The PAYE rate is uplifted to cover all the other things you need to take into account to reach the limited rate.