Supply teaching - umbrella companies

[MsHerodotus]

Would be grateful to know what people's experience is of this.
I am just starting supply teaching, and one agency is very heavily promoting an umbrella company. Do others recommend this? Pay is higher and you an claim expenses as well, but am very nervous. Maybe I am an old cynic, but when something seems too good to be true, generally there is a catch...

When I was supply teaching last term, I used an umbrella company. I had no choice - that was the way the agency worked.

I found it to be very convenient. I was paid the Thursday the following week, and was able to offset travel, office and lunch expenses. I worked at two separate schools but under one umbrella company, so the transition was seamless.

I was satisfied with my take home pay, so did not worry about the jiggery-pokery of the way they made deductions.

The government are about to crack down on the umbrella company expenses loophole. I would think about how that would affect your pay in future as travel and subsistence tax offsetting won't be so freely available from April onwards. It is being abused by offshore umbrella companies and HMRC think they can save hundreds of millions of pounds of unpaid tax. Umbrella companies are not in business to benefit employees.

I know this as have been researching this as a temp job agency asked me if I wanted to use an umbrella and I've never done it before. It's my choice so I think I will stick to straight PAYE through the agency, and it all seems very confusing and obfuscatory.

Check the small print!

The umbrella will charge a "processing fee" per payslip, sometimes quite hefty. Many will take employers NIC off your pay - as said above, someone has to pay the employers NIC, the school won't because you're not their employee, the umbrella won't pay it out of their fee, so they usually deduct it from your payslip, i.e. you pay.

The dispensation they claim allows them to pay your expenses is a benefit to them, not you. It's only purpose is to allow them to pay expenses without them seeing proof of payment or checking allowability. If HMRC challenge, it comes down to you to satisfy HMRC that your claims are genuinely allowable and that you can prove you spent the money you've claimed. The umbrella won't help you - it's not their problem. Luckily dispensations are all withdrawn from 6/4/16, so the umbrella's can't market this anymore.

The hourly rate is higher because no-one has the associated costs of employing you, such as holiday pay, sick pay, maternity pay, redundancy, pensions, or other benefits. You could find yourself very disadvantaged if something nasty happens to you - you basically have to throw yourself at the mercy of the state, rather than being looked after by an employer.

If you research properly and understand all the pros and cons, then you can make an informed decision. Trouble is, a lot of people just see the headline figures and fall for the smoke and mirrors. There are countless threads on internet forums from people just started with an agency/umbrella and shocked at seeing deductions for umbrella processing fees and employers NIC from their wages! Be aware.

Even more so, I'm totally confused as I am here in Australia about to move over to the UK and supply teach with my husband and the idea of these umbrella companies just baffle me! It's quite full on to read about actually and if anyone has fabulous advice on which company to look at then I would be truly grateful as it's very daunting to see the crazy amount of them on the net. We don't have anything like this over here so it's all very new. Thanks so much guys!