Does anyone know what a Umbrella PAYE for Locums is? Absolutely confused, its been a while since i did a locum, but have been told that you have to either be a Ltd company or be paid through an Umbrella PAYE system. Can anyone please explain what an Umbrella PAYE is? Does anyone know of a good Umbrella PAYE company?
Many Thanks in advance.
I think if you go through one of the agencies that supply hospital locums they'll have more info about it, and may even have their own umbrella company.
The self-employed umbrella taxation system is usually used to divert current UK tax liability through an offshore registered company in an attempt to offset existing company losses. It is usually regarded by Inland Revenue as blatant tax evasion, as opposed to avoidance. If you're only doing locums it isn't even worth considering. You would need the services of a five-star accountant, whose fees would probably bankrupt you.
The PAYE umbrella can allow the agent you choose to help you avoid IR35 legislation, ie being treated as an employee for taxation purposes. All providors charge for this service. As the tax allowances available to locum pharmacists are minimal, I personally feel you would probably be better off paying straight PAYE rather than paying a third party, who does not profess to be a chartered accountant, a hefty sum in an attempt to minimise your tax. Most importantly, services such as these are generally offered on-line, and their origins are pretty-much untraceable.
Fleeg.
Last edited by Fleegle; 30th, December 2009 at 11:50 PM.
The Umbrella company charge excessive of charges. You will be have to pay for Employer and employee NI which is about 17%, tax, then VAT, then weekly consulltation fee... taking off about 47% of your income. Umbrella company are blood sucker! am so pissed when i saw my payslip. I was not informed about all these when i joined.
I had the same problem in deciding what to do when I started out locuming all that time ago.
I actually ended going with the umbrella, but they have been quite good to be honest. I locum in hospital, and had to choose 1 of 3 options:
1- PAYE through the locum agency
2- umbrella group who paid me weekly
3-private ltd company which I would need to set up in my name
Apparently the best way, i.e. to get the most money, the ltd company route is the one to go down, but it would suit you best if you are locuming long term in hospital, but require a little bit of extra work in terms of making sure all the ltd company set up and maintenance issues are all dealt with, or you could just pay your accountant to do it.
the simple PAYE through the agency is definetly the simplest, but you need to remember that the agency pay you a lower hourly rate for the exact same job then if you were getting paid via the umbrella, or ltd company route.
I ended up choosing the umbrella, and I would email over a time sheet to them every week and would get paid the following week. initially they charged me £22 per timesheet sent but reduced it down to £15 after i told them another company approached me at a lower rate. As far as i know there is nothing dodgy about these umbrella companies in the UK, or least i have never heard that they are bad. Only reason i chose this route was because I was getting paid at the higher hourly rate from my agency, and also that the umbrella sent me a payslip every week, with all my tax etc done. No further work required, eg tax returns etc that you would have to do with the ltd company route.
You need to pick what suits you best and the type of locuming you are doing. The umbrella i used was called Bar2, although I a colleaugue of mine uses Brookson, which he says are really good (i dont know).
The one i would say you have to be careful of is the off-shore umbrella, I was constantly harrased by one of those who told me that I could get up to 85% of my wage, garanteed! Its a recognised legal loophole, that basically you send them your timesheet etc every week, and you get paid a minimum wage every week until the last week of the month, at which point you would get a dividend or something which was taxed at a much lower rate. This maybe just a wild rumour that I heard, but someone told me that apparently, of the leftover 15% of your wage, the agency keeps 12% and pays only 3% as tax! I have no idea how true that is, but as far as I was concerned that sounded tooo dodgy to me, hence why i didnt opt into that off shore umbrella.
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Re: Umbrella PAYE for Locums? 
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