Contracting - Umbrella Company Advice

[Feelingsupersonic1]

I have been stay at home mum for last six years . Before that was on PAYE working for an employer. I have just started contracting on a temp basis and was advised by recruitment agency I had to sign up to an ‘umbrella company’ to be paid and because I work in public sector something about IR35.

Totally clueless about what the implications are and the recruitment agency wasn’t very clear in it either just said they know I had to go through and Umbrella company, but all I know is that the recruitment agency promised me £140 a day (£700pw) before tax and NI and I am going home with £420.

Feeling totally shafted. Not earning nearly as much as I thought I would. Umbrella company taking off £18 per week in fees and then another £65 in “employment costs” but doesn’t specify what they are on payslip. When I enquired they said it is employer tax and NI. So I’m being taxed and NI twice.

Is this normal!?!

Anyone had an experience of working under umbrella company. Any accountant tax expert minds out there who can help?!

So if you get £700 gross a week, there's approx £65 deduction for Employee NI, £74 for Employer NI and £92 deduction for Income Tax (assuming you're a 20% tax rate payer). So leaves a net of £561 approx before umbrella fees which are £18 per week, so that then leaves £489 if a 4 week month or £471 if a 5 week month.

I'd be wanting to know why you're only getting £420. What's your tax code? Have you been taxed correctly?

Not all PS contracting jobs come under IR35, although HMRC are pushing hard for this .
However, IF the agency say that this contract IS inside IR35 then you don’t have a choice but to work with an umbrella company or look for a different contract. The other option is to research other Umbrella companies and compare fees - were you introduced to this one by the Recruitment company and are you obliged to use it?

Are you enrolled in a pension scheme? Student loan deductions? Correct tax code?

They'll also deduct holiday pay, which you'll get back when you take time off

Just looked at my pay slip

Deductions are
Umbrella company margin
Employment costs including employers NI
Holiday pay accrued
Workplace pension
Apprenticeship Levy

This is all deducted then PAYE, NI, and pension worked out and deducted after

That sounds about right then,

Their fees are pretty standard so nothing OTT about them. (I pay £22 per week to my umbrella company but they're one of the best).

Sounds about average then. Not sure about the holiday pay doesn’t have anything in pay slip will check it out with them. Thanks