Umbrella Companies

[DennisNedry]

How do these companies make money?

 

I've been offered a job through the employment agency REED. They are offering me £x an hour.

 

They have said I can take £x or go through an umbrella company.

 

The umbrella company are offering me £3 an hour extra.

 

Based on a 37 hour week this comes to £111.00 a week more money than REED will pay.

 

The umbrella company charge £20.00 a week margin and I'd also have to pay £51.91 Employers NI on top of standard NI and income tax.

 

But still, £111 - £71.91 is £39.09 a week more money for me.

 

I don't understand how this is viable.It seems to good to be true. Where is the catch? Am I being really stupid and missing something obvious here?

 

 

 

 

[Guest Sharpe's Fox]

Don't trust them since the Raccoon City incident.

[Webbo]

Go for it. Every body needs an umbrella.

[orangecity23]

Don't trust them since the Raccoon City incident.

Chris.....and the other STARS team members tried to warn everyone ........ but nobody believed them.

[SystonFox]

Don't trust them since the Raccoon City incident.

[DJ Barry Hammond]

https://en.m.wikipedia.org/wiki/Umbrella_company

I would suggest asking for a copy of the contract for both offers.

The catch for you is through an umbrella company you're not directly employed by your employer.

[Captain...]

How do these companies make money?

I've been offered a job through the employment agency REED. They are offering me £x an hour.

They have said I can take £x or go through an umbrella company.

The umbrella company are offering me £3 an hour extra.

Based on a 37 hour week this comes to £111.00 a week more money than REED will pay.

The umbrella company charge £20.00 a week margin and I'd also have to pay £51.91 Employers NI on top of standard NI and income tax.

But still, £111 - £71.91 is £39.09 a week more money for me.

I don't understand how this is viable.It seems to good to be true. Where is the catch? Am I being really stupid and missing something obvious here?

It costs a lot of time and money to process payroll and do all the taxes and other shit associated with employment, Reed are most likely outsourcing all of this to an umbrella company (which they may well own) who specialise in this stuff so can do it cheaper, it also splits the profit between Reed and the Umbrella company reducing the collective tax burden, or this umbrella could be eligible for certain tax breaks or the company may be based in Jersey or somewhere with very low tax so can avoid tax altogether.

Either way you can be pretty certain that it is saving Reed a lot more than £3 an hour if you go through an umbrella company, I would check that you don't have to do anything extra yourself such as your own tax returns.