umbrella companies and tax

[shyjane]

Should I be with an umbrella company as I don't earn enough to be taxed. Also, I work for a couple of agencies and the main one pays me through an umbrella agency. When I signed up with them, it seemed that this was the only way to get paid, surely this can't be right, and if not, how do I then get paid by them?

[factor-fiction]

I don't like the regime but it's the way many agencies operate now. The only winner is the umbrella company which saves on employers' NI. The employee pays a bit less tax and NI but this can go back as a management charge and my employer makes the employees pay the employer's NI contributions!
But if you are not a tax payer your code should help make sure you get the proper tax allowance on your main job.
My tax is a mess as well for this year and I'll have to wait until year end to get back my overpayments

[shyjane]

So, can't I be paid any other way, ie without the umbrella agency taking a cut, I just don't like it and it's a hassle every week having to send in my expenses. I always have to make sure it's done by Sunday online and sent in the post on Monday, it's a pain!

[factor-fiction]

I don't know. I was just told that was the way I'd be paid. They made it sound like a great deal- as if I'd get a basic rate plus expenses, but I soon realised that if you incurred £100 travelling and other expenses they repaid it but then knocked £100 of your pay.
I'm surprised that HMRC haven't clamped down on this

[factor-fiction]

^ should have said: knocked £100 OFF your pay

[buildersmate]

It's the employer's choice, and often done when the employer doesn't want the hassle of taking a person onto their employment records.
Often the reason is that there are employee benefits that are not available to contractors - holidays cannot be one of them, but membership of an employer pension scheme could be.
Completing records at the end of each week is a good practice to do.