With over 8 million employees in the UK receiving furlough through the CJRS recruitment agencies are seeking alternative options to umbrella but is PAYE the way forward?PAYE V’s UmbrellaMany contractors and agencies get confused by umbrella, umbrella is a form of PAYE where the payroll provider deducts the standard PAYE deductions from the contractors earnings and submits these to the government. The agency provides the contractor with an ‘agency rate’ which is an uplifted rate of pay to … [Read more...]
Why recruitment agencies are outsourcing their payroll?
It has never been a better time to be a freelance contract worker within the UK, growing numbers of agencies are becoming more and more reactive to the countries growing demand for a more flexible workforce.We have seen over a 40% growth in our business each year for the past 2 years, which is a clear sign of a change in which hirers are addressing their recruitment needs. With growth, comes further burdens to continue to grow unless processes are in place to support these … [Read more...]
Tax avoidance schemes aimed at contractors and agency workers
HMRC is aware of schemes that claim to increase your take-home pay by paying less Income Tax and National Insurance contributions. These schemes do not work and by using them you may be taking part in tax avoidance. How these schemes work Most umbrella arrangements operate within the tax rules, and correctly deduct tax and National Insurance contributions from all your earnings using PAYE.Some promoters of tax avoidance schemes set up umbrella companies and use them to convert income into … [Read more...]
To Prefer or not To Prefer…. That is the question
Whilst many Recruitment Agencies utilise a Preferred Supplier List (PSL) of umbrella companies and contractor accountants, how sure can stakeholders of an agency be that this is being enforced by their workforce?Unfortunately, not everyone plays fair and with the introduction of various pieces of legislation in the past few years, the need for an agency and its directors to protect itself has never been greater. The new Criminal Finance Act especially includes the corporate offence which … [Read more...]
Lorry drivers stung over accounting firm ‘tax dodge’
This article is damning to all those agencies and workers using non-compliant providers. Whether it be an umbrella company promising 90% take home pay or and MSC offering the same, it's too good to be true and you are running a huge risk.Compliant providers will apportion the correct PAYE deductions, won't provide ridiculous referral fees to consultants and will act in accordance with HMRC. With Debt Transfer and the new Finance Act, dealing with a compliant payroll provider is … [Read more...]
An open letter to workers and contractors in the NHS
Dear NHS workers and contractors,We would first like to start this letter with saying thank you. Thank you for everything you have done, everything you continue to do and everything you will do as you continue to slave under the laborious and hard hours working for our National Health Service.After reading through articles by the BBC, Independent, Daily Mail and so on it is clear that you are seriously having a hard and worrying time working where you do. This past year has thrown … [Read more...]
U-turn on Class 4 NICs
The Chancellor, Richard Hammond, has announced a U-turn on the proposed rise in national Insurance rates for the self-employed.In the Spring Budget it was announced that as of 6th April 2018, Class 4 NICs would be increasing to 10% from the current 9% in place, with a further increase to 11% the following year.In a letter to Tory MPs, the Chancellor revealed that he has “decided not to proceed” with the planned rise in NICs for self-employed workers, despite only announcing the measure … [Read more...]
Agencies slash PSCs’ pay rates, insist on umbrellas
PSCs are being blocked from staying as ‘Ltd’ companies and applying IR35 because agencies and public bodies want to head off hassle next month of assessing status and withholding tax.Ultimatums are therefore being sent to such PSCs before April 6th, in essence saying ‘convert to a PAYE umbrella, ignore the less-taxing model of being a PSC inside IR35, or be out of work.’“The best option for [you/a PSC], with regard to take-home pay, and us [the agency], from an admin and compliance … [Read more...]
Self-employment models coming under scrutiny again
In 2014, HMRC introduced new rules designed to remove so-called false self-employment for workers engaged via intermediaries. These rules centred on ”SDC” tests designed to establish whether a worker was, or was capable of, working under supervision, direction and control. Unless an engager could evidence that no SDC (or right to) existed, PAYE/NIC would need to be applied to the worker’s earnings as though they were employeesNot surprisingly, the number of self-employed contractors working … [Read more...]
Umbrella vs In-house PAYE
Finding it difficult to decide? Are you stuck between using an agency which offers internal PAYE or working for an Umbrella company? There are a few things you’ll need to consider before you make a decision.One of the main benefits of Umbrella over in-house PAYE is that with Umbrella you are fully covered by employment rights throughout. This includes statutory payments, such as; sick pay, maternity/paternity pay and holiday pay (if you do not opt out). Your workers’ rights are not always … [Read more...]