am i employed or self employed

**cojak** · 29 June 2012, 07:15

1st answer - when you work for an umbrella you are inside IR35.

Do you know what IR35 is? Search on this board to find out - google 'IR35 site:forums.contractoruk.com'

For a simple working arrangement you should be employed by the umbrella.

You CAN be self-employed with an Umbrella, but that is for tax avoidance purposes and can be very risky, you could lose money AND be chased to back-taxes by HMRC if the Umbrella is not very good (and many in this SE-Umbrella market aren't). You have to know what you are doing and what the risks are before doing this.

If you are not sure I would go to your local Citizen's Advice Bureau WITH your contract and ask them for help and advice. There are many things going on here between your current employer and the Umbrella that sound very suspicious. If you are in a union (but I don't think you are) see them as well.

I am not an accountant but I would get advice from someone who can see your new contracts and explain things to you.

Good luck.

**LisaContractorUmbrella** · 29 June 2012, 08:19

Originally posted by steve2776 View Post

at the moment i work for a company as an employee . i have been asked to work under an umbrella company for the same employer. the umbrella company has told me i will be working outside ir35 on a self employed basis. all equipment and uniform i need to do my job will be provided for me by the client. i will be paid on a weekly basis through the umbrella company . i am not sure wether i will be employed or self employed , can anyone clarify please

You cannot work outside IR35 through a third party - this process was outlawed with a piece of legislation called the Managed Service Company Legislation several years ago. If you work through an umbrella company you will be employed by them under an over-arching Contract of Employment and will receive payment through PAYE (Pay As You Earn) which means that you will pay income tax and national insurance contributions in the same way as any other employee. Your salary with the umbrella company will be based on the assignment rate less an amount which the umbrella company is obliged to pay HMR&C for Employer's National Insurance contributions and an amount which the umbrella company retains as their margin. If you have no other income or tax liabilities it should not be necessary for self-assessment forms to be completed.

HTH

**original PM** · 29 June 2012, 08:24

Also I would ask you employer what is wrong with employing you directly - it seems very strange for a company to do this without having a motive which is potentially not in your best interests.

**moggy** · 29 June 2012, 08:29

going straight back to the same employer for your first contract is a high risk of being inside ir35 what ever way you work. sounds like your "employer" has no idea what ir35 is.

**LisaContractorUmbrella** · 29 June 2012, 08:44

Originally posted by original PM View Post

Also I would ask you employer what is wrong with employing you directly - it seems very strange for a company to do this without having a motive which is potentially not in your best interests.

Without wishing to be cynical, I would suggest that the employer wants to try and unload their employer responsibilities

**cojak** · 29 June 2012, 10:01

Originally posted by LisaContractorUmbrella View Post

Without wishing to be cynical, I would suggest that the employer wants to try and unload their employer responsibilities

Exactly - go the your CAB asap.

I could imagine something horrible here, like the umbrella using this 'self employed' comment to evade their responsibility to pay your NI and PAYE.

But of course, it may not be that bad, but you do need someone to look at this for you.

**LisaContractorUmbrella** · 29 June 2012, 13:24

Originally posted by cojak View Post

Exactly - go the your CAB asap.

I could imagine something horrible here, like the umbrella using this 'self employed' comment to evade their responsibility to pay your NI and PAYE.

But of course, it may not be that bad, but you do need someone to look at this for you.

Just went on that other thread by mistake - thought we had an echo here for a minute

Cojak, your horrible imaginings are probably not far from the truth - there are quite a few dodgy sort of schemes out there that require the individual to be self-employed and they usually promise 85%+ take home. The umbrella company's responsibility is the income tax on min wage (with class 2 nat ins contributions) - unfortunately the balance of earnings is usually in some form of loan which as we all now know is likely to pose problems for the individual following a visit from HMR&C's inspectors.

**steve2776** · 29 June 2012, 16:16

thank you

Originally posted by LisaContractorUmbrella View Post

Just went on that other thread by mistake - thought we had an echo here for a minute

Cojak, your horrible imaginings are probably not far from the truth - there are quite a few dodgy sort of schemes out there that require the individual to be self-employed and they usually promise 85%+ take home. The umbrella company's responsibility is the income tax on min wage (with class 2 nat ins contributions) - unfortunately the balance of earnings is usually in some form of loan which as we all now know is likely to pose problems for the individual following a visit from HMR&C's inspectors.

i would just like to add that the umbrella company are asking me to sign a self employed contract
thank you very much .

**LisaContractorUmbrella** · 2 July 2012, 06:38

Originally posted by steve2776 View Post

i would just like to add that the umbrella company are asking me to sign a self employed contract
thank you very much .

Then you will be responsible for your own tax and NI in which case I would be asking the question - exactly what are the umbrella company going to do for their fee (which, if I know these schemes is about 5% of your income)?

am i employed or self employed