Umbrella Company and Sellick Partnership

[Lovemybunnies]

I really hope someone can help. I am a locum solicitor and have been self-employed for nearly two years. My tax is paid up to date and I have not had a problem with that. My latest assignment is with Sellick partnership who told me that I need to be with an Umbrella company to work for them. They put me in touch with Danbro who said they would charge me about £10 Pw for their services. Stupidly, I didn’t look any further into it and the firm wanted me to start asap so I signed up…Fast forward to my first pay slips and they taken a significant amount of money for what they term ‘ company deductions’ which include something called ‘employer margin’ and employment costs. They have declared my gross income to HMRC to be total money earned less these ‘employment costs’. In total I estimate I will lose nearly a third of all money earned this month to these costs. I also can’t claim any expenses anymore as I am classed as employed. Why would anyone use these companies and if I leave them will I have to give up the role with Sellick? Any advice much appreciated.

It sounds like your role is deemed to fall within the IR35 rules.
https://www.contractorcalculator.co.uk/five_questions_inside_ir35_contracts.aspx.

If the role is not actually inside IR35, would they be willing to work with as a limited company rather than self employed? You would then be allowed to claim expenses.

Workers rarely choose to work under an umbrella, it is dictated by the nature of the work and the relationship with the end client. Some companies have a blanket rule and don’t accept self employed / limited company contractors. Technically you could move to another umbrella but £10pw is not a very high fee, you’re unlikely to find a lower rate, and the tax/ NI will be the same. Sellick may have a short list of umbrellas they’ll accept working with.

It’s not possible to claim most expenses under an umbrella. Danbro should have given you an illustration of your take home pay before you started. You could ask the client is they’re willing to increase your rate, or employ you as PAYE direct.

You can reduce the employer’s costs by contributing to a pension via salary sacrifice, but that won’t increase your take home pay unfortunately.

Thank you for your answer @OnceUponATimeInTheVest . By some miracle Sellick have backed down and are letting me invoice direct…