Supply pay - umbrella company?

[PrincessSlayer]

Hoping there are some more experienced supply teachers out there...

I have signed up to an agency and they have said I need to sign with an umbrella company so that I can be paid through them.
Problem is, there seem to be an endless number of umbrella companies and I don't know which one to choose!

The agency have one they recommend but I don't know if that is just because they get benefits from this particular one. It's called ePayMe and I'm in London if that makes any difference.

Anyone got any advice/warnings before I just sign up to that one? I am terrified of choosing wrongly and getting screwed over...

[DontGotoRoehampton]

You will be screwed over with every umbrella company - they evade employers' NI and you may end up with serious problems with HMRC -ie YOU having to pay - with interest - what the employer should have paid. Look on the TES Supply Teacher's forum, lots of very knowledgeable people on there saying do NOT agree to an Umbrella company - insist on PAYE.
It is illegal to insist on Umbrella Companies, but many disreputable agencies do. I reported one recently to the REC and HMRC and they are taking action.
Reputable agencies offer PAYE - find one of those.

[DontGotoRoehampton]

And if your agency has insisted on UC - and thy are a member of the REC report them to the REC and also let your union know, as they are running a campaign to out the rogue agencies.

[PrincessSlayer]

Thanks for replying!
Ok, sounds like umbrella company a very bad idea then!
I will email my agency but to be honest I'm not brilliantly impressed with them so far so am anticipating a load of balls in reply!

[EdithSitwell]

Watching with interest. I'm with a reputable company and I get paid through an umbrella company. I just accepted this - I wasn't aware there might be an alternative.

[DontGotoRoehampton]

Edith - you should have been offered PAYE. You should not have to pay to have your pay processed, and the employer should be paying employers' NI, not evading it and leaving you with the ultimate liability.

[RinkyDinkyDoo]

I'm with a reputable agency and am being paid by epayme. I did phone up the HMi to talk about tax, as I'm with 2 agencies, she said that epayme had the right code for tax and that was it, so if it was wrong would she not have told me then? Confused now.

[Mitzi50]

Interesting - I wasn't aware there was a choice - my agency said I had to use 1 of 2 umbrella companies. I didn't give a thought to NI (will check pay slip). I have an appointment with an accountant next week about something else- I will ask them about this.

[EdithSitwell]

Thank you DontGotoRoehampton, will definitely be looking further into this.

[DontGotoRoehampton]

one of the TES threads on this

[PrincessSlayer]

I tried asking my agency if umbrella companies were a must and my contact immediately launched into a spiel of yes, this is the one we recommend. I have said I want to be paid with paye and received no reply - I get the feeling they aren't pleased but to be honest if they cause trouble I will know they aren't an honest agency.

[alexbaines1]

Hi folks, I hope you don't mind me posting on this thread but as Director of an umbrella company I wanted to set the record straight. There's a big difference between a responsible, UK based Umbrella Company and the kinds of offshore arrangements that have received a lot of negative press, especially within the education sector, where large numbers of teachers were with a couple of offshore service providers based mainly in Jersey, Guernsey and the Isle of Man. Those companies were just taking a percentage 'cut' of the teachers wages and were not operating PAYE and not paying over employers national insurance. Due to new HMRC powers, those offshore employers had to disclose details of their workers who were pursued for the unpaid tax and employees national insurance, as per DontGotoRoehampton's points.
In my view, the decision to use an umbrella company should always be the choice of the supply teacher, once they've got all of the facts. For example we give all prospective employees a financial illustration based on the PAYE and umbrella rates, so they can make an informed decision. Umbrella won't be the best option for every supply teacher.
My company is a member of an industry body called the FCSA which works with a lot of REC members, promotes best practice, the highest compliance standards and provides a voice for the industry.

[DontGotoRoehampton]

PrincessSlayer - if they do not offer you the option of PAYE they are breaking the law - do not sign with them and ideally also send an email reporting the to the REC.
If they are trying to tempt you will 'illustrations' of what you can save in tax based on spurious offsetting of expenses - it is all a con, it is just a way of artificially reducing employers NI and is an evasion scam. And no way should you be paying your employer £3 per day or whatever the charge is to run your pay...
There are plenty of agencies ( I am with two) who pay PAYE, no quibbling, honest and above board.
Don't forget if the agency is conning you they will doing the same with schools - steer clear and go with the good guys!

[DontGotoRoehampton]

[https://community.tes.co.uk/tes_supply_teaching/f/62/t/712997.aspx The Umbrella Company Con Trick]][

[DontGotoRoehampton]

oops - try again...
The Umbrella Company Con Trick

[MaybeDoctor]

I am by this!
It is bad enough that options for local authority supply have almost entirely gone by the wayside and everything is now in the hands of agencies - but now teachers are having to negotiate some kind of financial catch 22 in order to actually get paid properly... And by properly I do mean ERNIC contributions! Frankly, I would not want to work for an employer that wanted to use an umbrella company to evade their responsibilities to pay ERNIC.

[alexbaines1]

I'm aware of this report put together by UCATT which is useful in highlighting some of the bad practice that goes on, especially in some parts of the construction supply chain, however it's not a technically accurate description of how most umbrellas work.
It's a common misconception that Umbrella's don't (or try to avoid) pay employers NI. If you're PAYE through the agency then the employers NI and holiday pay is accrued/paid in the background without you even knowing about it. If you choose to go with an umbrella company then this is usually added to the PAYE rate to make the 'uplifted' or 'assignment rate', which is then paid by the Umbrella (as the employer) rather than the agency.
I have heard of less scrupulous agencies, however, that don't pass this uplift to the Umbrella.
Here's the FCSA response to the unions criticism. www.fcsa.org.uk/2014/criticism-umbrella-employers-unfounded-says-fcsa/

[DontGotoRoehampton]

The simplest solution is just to insist that you are paid PAYE. All agencies are supposed to offer this, by law.
Check before you meet an agency that they will pay you PAYE and don't waste time on those that don't.
Pretty easy to make the cut of those you can work with and those you should steer clear of. Agencies are not your friends, they are not here to promote you career, they are in business.
Insist on PAYE - if they are reputable they will have no problem with that.

[DontGotoRoehampton]

AlexBaines who says he/she is in the industry admits there are unscrupulous companies. You won't know who they are - why should you/how can you?
If you insist on PAYE - no prob with them.

[alexbaines1]

DontGotoRoehampton I agree Agency PAYE is a simple solution, as you can't claim any expenses, however it's not always the most financially beneficial.
Also, in my experience, good agencies do care about their candidates as ultimately that is what they are selling to the schools, and as they are a business they are looking for happy customers and repeat bookings.
I acknowledge it's difficult to know who is and isn't scrupulous, hence why I would highly recommend talking to service providers who are members of the FCSA before making a decision.
These businesses get regular visits from HMRC to ensure that they are playing by the rules and annual audits by Ernst & Young to ensure compliance in all of the key areas including operating PAYE, employment law, ID and right to work checking, expenses policy, insurances and lots more. It's things like this that really differentiate the responsible umbrellas from the cowboys.

[DontGotoRoehampton]

Insist on PAYE.
You area teacher, not a tax-evading banker looking for for a temporary loop-hole before you get caught.
If you have legitimate expenses you can claim them through your tax return at the end of the year (simple form, free online at HMRC).
Do not waste time 'talking' to Umbrella Companies.
There is no such thing as a free lunch....

[PrincessSlayer]

Well, when I mentioned the REC and possibly leaving the agency - surprise surprise, PAYE became an option. How magical!
Really has left me with icky feelings about this agency but I think I will stick with them if they can pay me properly because they have a lot of work in my area.
Very grateful for MN at the moment though as I could have ended up signed up to something I would really regret!

[Blazing88]

:( Watching with interest!

I've just had an awful time filling in a tax return for 18months ago, when I was doing supply work.

When I actually looked at my wage slips online with the umbrella company..omg. I should have been paid £100 a day rate, and my take home pay was actually about £80 (so what you'd expect after tax and NI's) . However, they actually paid me NMW and made up the rest with 'expenses' and 'bonuses'. I also had paid the employer's NI's.

Not impressed.

Not even sure now if I'm the one now at fault :(

I was with RACS, which actually I found really really good on the phone, and the online entry forms were very easy.

I had no idea you could insist on PAYE>

[happyteacher1]

Never EVER use an umbrella company. ALWAYS get paid PAYE. The agency CANNOT refuse to pay you PAYE by law.

[RinkyDinkyDoo]

Ok, I'm going to phone my agency on Thursday and say I wish to change from umbrella company payments to PAYE.
Do you think that will be possible as I have worked for them for 3 months and already been paid by the umbrella company? They didn't offer me PAYE to start with, has anyone else managed to switch??

[happyteacher1]

YES. Just tell them you want to be paid PAYE from now on. The agencies won't tell you that you can be paid PAYE as it is cheaper for THEM to farm you out to an UC as they don't have to pay your employer's NI contribution - instead YOU end up having to pay it!!!!!