What do you want to know?
- What’s an umbrella company?
An umbrella company provides a way for workers to get paid rather than their recruitment agency or client paying them via their own PAYE scheme’The worker actually becomes an employee of the umbrella company and can then offset any business expenses against their taxable income. The result is that often the employee takes home more pay than if they were paid at the same rate via PAYE.
Some umbrella companies will claim to have special or unique expense dispensations from HMRC or even to be ‘HMRC approved.’ This is a load of boloney, as neither is actually possible. Only HMRC can determine what business expenses can be claimed and they must always be “wholly necessarily and exclusively incurred in carrying out the duties of the employment.” Don’t take any risks with claiming expenses as you may just be asked to produce receipts at any time.
There are literally dozens of umbrella companies in the UK and they can only differentiate themselves on the margin they deduct from your pay and their customer service. If you’ve been recommended to an umbrella company by a friend or your agency, it’s worthwhile asking what is that makes them feel that provider is the best.
- What do I need to be able to join Originem?
When you join Originem, we’ll need certain details from you to make sure we can pay you! This includes your National Insurance number and bank or building society account numbers. If you don’t have either of these, then call us to discuss your other options
We’ll also need to check that you are entitled to work in the UK usually by checking your passport if you are a UK national. If you’re not a UK national, we’ll need to see your work visa or other authorisation to work in the UK.
And as you’ll be employed by Originem, we’ll also need your P45 (or alternatively P46) from your last employer to make sure we’ve got your correct tax code. If you are put on an emergency tax code, you could well end up overpaying tax.
- What should I do with my P45?
Send it to us at Ground Floor, 15 John Bradshaw Court, Alexandria Way, Congleton, Cheshire, CW12 1LB. As your employer, we really need your P45 to make sure you’re paying the right amount of tax. Without it, you could be placed on an emergency tax code and end up overpaying tax, which could then take a while to reclaim.
- What should I do if I don’t have a P45?
No problem, you’ll need to fill in a P46 form instead. Call us on 0161 713 1730 to find out more.
- When will I receive my expenses?
It’s important to explain that your business expenses don’t actually get reimbursed to you. The amount you claim, for things like travel and subsistence, is simply offset against your taxable allowance. As a very simple explanation, if you earn £1000 and don’t claim any expenses, you’ll be taxed on the full £1000. If you were to claim £200 worth of expenses, this would be deducted from the £1000 earned meaning you only pay tax on the remaining £800 of income.
We process your expenses as soon as we receive them and they are usually offset against your pay each week.
- Do I need to keep my receipts?
Oh yes. It’s good practice is to keep all your own as the taxman may audit you at any time. You need to send us receipts for travel, accommodation and training/tuition fees – put please keep copies of these, just in case. Whatever your umbrella company tells you, it is your responsibility to only claim for expenses you have legitimately incurred and if HMRC decide to investigate, it will be your neck on the line.
- What accommodation costs can I claim?
If you’ve had to stay away from home overnight in the course of working at your client’s site, you can offset the cost of your accommodation against your taxable pay. This includes stays in B&Bs or hotels but not if you have just stayed on a friend’s sofa for the night.
- I’ve just bought a laptop – can I claim for it against expenses?
No, sorry, afraid not. Please contact us for the full list of what you are entitled to claim for.
- When will I get paid?
Your payment cycle often depends on the arrangement you make with your client or recruitment agency but is usually done on a weekly or monthly basis. Most Originem employees are paid on a Friday but we run several payrolls every day to accommodate different arrangements.
- Do I need to arrange my own professional insurance?
Not at all. As soon as you become an Originem employee, you’re covered for £10m worth of employer’s liability and £5m of public liability insurance. In rare circumstances, our insurance policy won’t cover certain activities so if, like Homer Simpson, you’re handling radioactive substances every day, give us a call to check.
- Does being employed by Originem affect any future pension or statutory benefits I can claim?
No, you will be making at least the minimum National Insurance contributions to ensure that your statutory rights and pensions will not be affected.
- What do you mean by a freelancer or contractor?
The terms are often interchanged and our employees also refer to themselves as temps or temporary workers, or sometimes as interims or locums in the health services. Traditionally, a freelancer is a person who works on a temporary basis for several different clients at the same time. Like a photographer who works here for a couple of days, there for a couple of days and somewhere else entirely in between. A contractor is someone who works on a defined project in one place for a set period of time, ranging from one month to two years. Contract work is common in the IT, engineering and financial services industries.
- What is IR35?
IR35 is a piece of legislation originally introduced in April 2000 to clamp down on what the Government perceived to be tax evasion by contractors. Prior to the legislation, many permanent employees were encouraged to leave their job, set up their own limited company (often called a Personal Service Company or PSC) and return to the same place on the Monday morning to do the same work but with far fewer tax liabilities.
IR35 doesn’t mean that you can’t operate in this way, but if HMRC deems that you are in fact, as good as employed, you’ll have to pay more tax.
If you‘re being paid via an umbrella company, IR35 isn’t a consideration because you’re employed by the umbrella company who ensure you pay the correct level of tax and insurance.
- Why am I opting out of Regulation 5?
Regulation 5 is part of the Agency Workers Regulations (AWR) that came into force in October 2011. Regulation 5 gives temporary workers the right to the same pay and employment conditions as their permanent equivalents after a 12 week qualifying period. If you are an umbrella company employee and are choosing to opt out of Regulation 5, it is probably because you risk taking home less pay after the 12 weeks because your ability to offset your expenses against your taxable pay does not constitute ‘pay’ under the terms of the legislation, meaning that your client or agency will have to uplift your basic rate. They will only do this to match your permanent equivalent, not to provide the additional benefits you used to get as an umbrella employee.
In this circumstance, you will probably be offered a Regulation 10 or Swedish Derogation compliant contract of employment. This means you are treated as a permanent employee, not a temporary worker and so AWR does not apply.