Factoring, IR 35, public sector employees, umbrella companies and ridiculous offers
We had another spam email from an umbrella company today. It was trying to rattle our cage over “the new” Payroll IR35 and public sector employees.
IR35 if you are unfamiliar with HMRC's penchant for abbreviations is the rule under which a employees should be categorised self-employed, employees etc. for taxation purposes. See the links at the bottom for more helpful information.
Furthermore this umbrella company's headline offer was from as little as £10… That did sound to good to be true, £10 total for RTI, Employee NI, Employer NI correct deductions, payroll calculations in accordance with the new rules and if you have a payroll or more than £3 million per year, the apprentice levy.
All this makes what they were offering sound good value for very complicated calculations, but these implimenting these rules is not that complicated!
Here’s why and here is the real impact of their offer:
Each employee will have at least £10 deducted from their pay packet or in the region of £500 per year. Good reason for any worthwhile employee to take a trip to an agency that doesn’t deduct half a grand from them.
If you reimburse your workers then it’s out of your margin and pocket. 20 employees that’s a massive £10k a year from you.
Ah! but now the umbrella company plays it’s trump card: they take the responsibility for the calculation. Except that these calculations are all subject to HMRC approval in HMRC devised tests. Well our software passes all of those tests too and we take the responsibility for the calculations being correct or we lose our HMRC status.
So let’s compare Ava advanced agency web system with an Umbrella company for: 20 workers:
You can manage 20 workers bookings per week with one user licence easily and get all you messaging and compliance sorted at the same time. A single monthly licence and server hosting is well repeat well under £80 and two user licences well repeat well under £120 pcm, so that is a massive saving of £700 per month or £9K a year.in your pocket (or going to make your agency more attractive than the one down the road)
There is no such thing as a free lunch, but paying 10k for someone else’s somehow doesn’t seem right.
So If you use an umbrella company and would like a nice little present for Easter give us a call and see what we can do for you.
01491 845 400
Links that may help