umbrella payroll company

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Please help me decide if I should accept a temp job which would be paid through an umbrella payroll company! I had never heard of this before but googling has made me question what fee they would deduct from my wages, and also whether I would be paying both my own and the company’s NI contributions - does anyone know or have any experience? It’s only a 4 week contract but I don’t want to get screwed over! Thanks in advance for any help

You need to find out the terms from the company tbh, as they will vary between companies. Is it an umbrella you set up, or theirs? HMRC is massively cracking down on these umbrella companies under the IR35 rules, so you definitely want to have checked it out properly. What does the contract say?

I’ve been paid through one of these before. All of the above should be written into your contract with them and you should be able to contact them to talk about it. I had no problems with mine whatsoever - very straightforward.

All i’ve found out so far is the umbrella payroll company is Paystream

Are recruitment agencies allowed to force you to use umbrella co? I didn't think they were.

Make sure they aren't doing into make your hourly rate seem more attractive. It was (still is?) a common trick by agencies.

www.theguardian.com/money/2016/oct/21/temporary-workers-umbrella-companies-extra-costs-dodging-ni-cutting-rights-supply-teachers

As Nacreous says HMRC are massivly cracking down on these. They are a way to save the employre (not you) money as you are not entitled to any sick pay, holiday pay and the employer doesn;t pay Employers NI or pension contributions.

If the contract is a genuine short term self employed contract then you should be able to invoice them directly. You don't need to be a limited company and you would pay self employed NI contributions.

These umbrella companies are a way to try and get around employment law.

A couple of years ago I contracted for a few months and was paid via an umbrella company. I think I paid them about £15 per week for heir service.

I had a choice of either using the umbrella co or setting up a Ltd company. The umbrella company does all your tax / NI for you. I was, I think, responsible for paying employers NI contributions as well as employees. Not sure exactly how that works. Maybe someone more knowledgeable will come along shortly.

AlexanderHamilton is exactly right: you shouldn't be compelled to use an umbrella company and should be able to invoice directly if you are truly self employed. No one should ever be telling you it has to be through a limited company.

Are recruitment agencies allowed to force you to use umbrella co? I didn't think they were

Technically, they're probably not, but you might find they're less keen to find work for you if you don't co-operate on the umbrella front.

Make sure they aren't doing into make your hourly rate seem more attractive. It was (still is?) a common trick by agencies

That's DPs experience when he worked in the construction industry as a machine driver, which he has done on and off over the last few years.

Fortunately, that he has done in the past couple of years has been via the contstruction industry scheme, where they take a flat 20% tax off each pay packet, plus £10/20 pw fee. But he did get to keep just about most of his fairly decent hourly rate and the tax thing was all sorted out when he did his tax return.

Going back before that, he 'had' to use the umbrella company or else they were less keen to find him work and then what started off as £14 ph turned into NMW plus a baffling combination of expenses, bonuses with some tax, the umbrella fee and both employers and employees NI taken off.

In reality the money he earned was probably equivalent to about £10/11 ph and the worker and the government lost out while the umbrella company and maybe the agencies via commisions/kickbacks gained.

However, there has been a lot of pressure from construction industry unions and the norm now seems to be CIS, which is much fairer to the workers, who are generally machine drivers, brickies, plumbers etc who just want to earn a living.

Sadly direct employment by the construction companies, and employment rights, doesn't seem an option for many these days. Sounds like it could be the same in whatever industry the OP is in, whether it is construction, supply teaching or many of the other sectors that have gone this way.

I was a temp paid by paystream and I'd highly recommend them

I run payroll and CIS payments for a construction main contractor Barbara and we never ask that our subbies use umbrella companies and we certainly don't deduct any fees. We do advise they get an accountant to help them woth their tax returns/CIS submissions. The company I work for either employs men directly on our payroll or we sometimes use subbies on a one off basis.

But I know we are the exception and it is a big issue.

it’s a temporary admin position for 4 weeks so not self-employed. i’m hoping the recruiter can send me a breakdown of what i would actually take home.