Contractor Umbrella - any good?

[jamesbrown]

i think the simple question here is:

Will a contractor working though CU prior to the change in AL legislation see a drop in take home earnings after the legislation takes effect assuming no other changes to their rate or paid hours/days?

I.E. If they took home £300 per day before the changes, how much will they take home after, assuming nothing else changes?

The answer is yes, AFAIK, the AL can and will be passed down by umbrella cos, but it needs to be done indirectly. It cannot, legally, be passed on directly. I recall some incredulity about this specific point in the Commons debate, but you can't really blame the umbrellas. It's bad policy.

[moggy]

The answer is yes, AFAIK, the AL can and will be passed down by umbrella cos, but it needs to be done indirectly. It cannot, legally, be passed on directly. I recall some incredulity about this specific point in the Commons debate, but you can't really blame the umbrellas. It's bad policy.

Agreed, the cost has to be covered somewhere, but how can this be calculated without some element of a hidden margin would be my question? The AL cost to the business could change daily/weekly/monthly depending on payroll size.

[jamesbrown]

The AL cost to the business could change daily/weekly/monthly depending on payroll size.

Correct, as I understand it. It's just another cost for an umbrella and they'll need to recover it as best they can, but imperfectly.

[lucyclarityumbrella]

The answer is yes, AFAIK, the AL can and will be passed down by umbrella cos, but it needs to be done indirectly. It cannot, legally, be passed on directly. I recall some incredulity about this specific point in the Commons debate, but you can't really blame the umbrellas. It's bad policy.

Absolutely, our AL bill will be around £15,000 per month based on our contractor numbers, and the £29.50 margin cannot cover that. We had argued endlessly with MPs, HMRC and BIS but they simply will not apply any exemptions to this due to falsely inflated payroll figures, their comments were along the lines of, if we offer an exemption, this will cause a loophole which will be open to abuse.

[lucyclarityumbrella]

The only options available are to either increase the margin - which could lead to a variable margin across the business, causing a huge headache to apply this to individuals. Alternatively, I think some umbrella's are applying a percentage from earnings for their margin - but this will penalise contractors earning higher figures. Then there are others who are simply not mentioning it to contractors yet, but come April 6th it will appear somewhere!

[moggy]

The only options available are to either increase the margin - which could lead to a variable margin across the business, causing a huge headache to apply this to individuals. Alternatively, I think some umbrella's are applying a percentage from earnings for their margin - but this will penalise contractors earning higher figures. Then there are others who are simply not mentioning it to contractors yet, but come April 6th it will appear somewhere!

so how is yours calculated?

[Guest]

Hi Lucy,
1. Does CU apply fixed weekly/monthly AL charge to contractors and not percentage of their earning?
2. If so how much is it weekly and monthly?
Please answer in layman's terms, my accountancy jargon in nil.

[WilC]

after reading lot of posts on this forum, im sure contractor umbrella may be a good one to join, but the fee is near the high end range compare to others and how long would it take normally for you guys to be "approved" by my agencies if you are not already on their approved list? thanks

[lucyclarityumbrella]

We are applying the levy, in the same way as the Employers NI is applied; so the Levy is taken as 0.5% of earnings over £157 per week, from the contract rate ie monies received from the agency or end client.

[lucyclarityumbrella]

after reading lot of posts on this forum, im sure contractor umbrella may be a good one to join, but the fee is near the high end range compare to others and how long would it take normally for you guys to be "approved" by my agencies if you are not already on their approved list? thanks

We realise our margin is not the cheapest on the market - but I ensure that our account managers only have around 200 contractors each, so you do not end up with a call centre mentality with customer service dropping - something I am not prepared to let happen. As for the Approved Supplier List - I am more than happy to complete any compliance questionnaire and speak with them directly to make sure they have everything they need from us, if that helps