An Umbrella company, called Legal-e... Is it legal?

[Jasonoughts]

Hi People,

 

A quick question.

 

I work for an recruitment company which is based in Bradford. They are my employer and pay my wages and obviously take a cut of my wages each week. I live in Leeds and have a round trip of 32 miles to "Morrison's" in a Village called Flaxby ,where I work as a Fork lift truck driver.

 

I am currently paying a £40 minimum in petrol a week, and have kept petrol receipts for the last 4 months.

 

My question is, Can I reclaim expenses from the agency ( my employer ) or the government? Sorry if this question has been asked before, as I am new around these parts.

 

Many Thanks.

[rebel11]

Thread moved.

[Jasonoughts]

Hi,

 

Thanks for the thread moved reply....

 

To where please?

[BSC]

For commuting to work you wouldn't be entitled to anything I'm afraid.

[Jasonoughts]

What about working for an umbrella company in a self employed manner?

[BSC]

I doubt it but I don't have sufficient knowledge in umbrella companies to say for definate. I'm sure any payment would have had to have been agreed in advance.

[Jasonoughts]

I have worked on jobs where fellow colleagues have worked for umbrella companies and they manged to claim petrol expenses back through said companies. So I am assuming you must be able to claim back tax etc...

[Greer8472]

A round trip of 32 miles? Hate to sound harsh but I am doing a round trip of +70 miles per day during the week. Being pushed pass £50 per week for fuel. The best I have got from the agency is a rate of 10p per hour from the rate they were offering for a normal worker. I would love to have a forklift license tbh be on a ever higher rate. 8-)

[BSC]

My trip is 92 a day. Only bonus is it's almost all motorway and I average 50+mpg

[Greer8472]

My trip is 92 a day. Only bonus is it's almost all motorway and I average 50+mpg

 

Which goes to show there is always some one who has to travel further

[Sidewinder]

You can only reclaim mileage if the agency send you to separate places of work on a regular basis, so if you were working at several sites then you would be able to reclaim mileage between sites, but not for the mileage to your normal place of work. If you are on a long term placement then the location of the site would be classed as the 'normal' or 'permanent' place of work and you cannot claim expenses.

 

Some Umbrella companies will claim that you are permitted relief for the journey to and from the place of employment, but this is only valid for multi-site or short term placements in between periods of regular work, and HMRC will inevitably catch up with, and charge back cases where this happens with long-term placements.

[Atlas01]

i was hoping the taxmans p87 would be helpful but that's only for "employees" to claim mileage and usually agency worker = not employed

 

that's about as much as i know on tax unfortunately so unless you can claim to be an employee.......................

[Jasonoughts]

Thanks for the replies, Sounds like it is a big no no then.....

[citizenkain]

Ive worked for several agencies here in scotland and been paid through umbrella companies,they always pay me 20p a mile expenses,I thought they all did?

[Jasonoughts]

How much do the umbrella company charge you? I would probably make 12.50 on petrol reclaims. However, your hourly rate goes up with working through umbrella's I am led to believe..

[citizenkain]

yeah,the agencies can arrange to pay you through an umbrella company,the umbrella company i use is called fairgate construction,they handle wages for a lot of agencies,they deduct 18 pounds a week from your wage and you get tax relief on that,you fill form in for petrol help also you get 5pounds a day food allowance if its less than 10 hours,10 pounds a day if more than 10 hours they also arrange 3pounds a day laundry its all legal but ya need an umbrella company to do the paperwork,I get 10 pounds an hour as well so it aint too bad

[Jasonoughts]

citizenkain,

 

You mention needing an umbrella company?

 

Wonder if you can handle it yourself and cut out the middle man. Would need the advice of an accountant.

[Sidewinder]

Be very careful. This is all only relevant if you would normally be self-employed and would be able to file these expenses as essential in the course of your business. Meals can only be claimed as a necessary business expense, not claimed automatically, and the amount claimed HAS to be spent on a meal - therefore it A) must be an allowable expense, and B) the claim must be for the exact amount spent. Similarly, and mileage claimed must be allowable, ie only claimed for trips over and above those made to the normal workplace.

 

Many umbrella companies have previously been able to use a 'dispensation' from HMRC in claiming such expenses as 'allowable', however due to abuses of the type that are being discussed here (reclaiming mileage for what would be 'commuting' for everybody else, and claiming relief for meals which the worker would have eaten or had to pay for in any case ), HMRC have already announced that they intend to revoke the special dispensation afforded to Umbrella Companies and in future, such claims will require receipted evidence and will be subject to the same scrutiny as for other tax affairs. The consequences for Umbrella Companies are likely to be severe, and particular where the revocation could be made retrospective, there will be some hefty tax bills involved.

 

For most people travel to work is a necessary and expensive affair, and commuting to a normal place of work has never been tax-deductable - people instead have to consider either moving or changing jobs if the cost is not affordable. Mileage required over and above the 'norm' is subject to tax relief, but only in certain circumstances. Similarly, most people either buy lunch and have to pay for it, or take a packed lunch, but again it is reasonable that if you are required to work over and above what is normal, or have to entertain clients, that relief can be given in certain circumstances.

 

What is being discussed here is bordering on tax evasion....

[Jasonoughts]

Sorry I disagree,

 

I have never avoided paying tax and never would. Just trying to find out what I can / cannot claim back in which ever manner. Seems like I have the answers I was looking for.

 

Any tips on Working Tax credits sidewinder. I.e At what threshold of annual wage can you stop claiming?

[Sidewinder]

Sorry - I was not intending to point the finger at anybody and I certainly wasn't labelling you as a tax dodger! Believe you me, if I could find a way to reclaim tax on my private mileage I would have done so like a shot! Umbrella Companies crop up from time to time on the forum for various reasons, and whilst some people think they are the bees knees, there are an equal number of horror stories.

 

WTC is way too complicated to explain in simple terms - the best thing you can do is to use the Calculator which can be found here http://www.direct.gov.uk/en/MoneyTaxAndBenefits/TaxCredits/Paymentsandentitlement/entitlement/DG_181270

[citizenkain]

personally I think you are better being selfemployed these days,you could cut the agency out by approaching potential employers yourself,agencies obviously charge a few quid more than they pay the workers,thats how they make their money,if you were selfemployed you could probably get a pound or more an hour and claim your fuel receipts as tax deductable also any other costs,overalls,gloves,boots etc that you could justify

[Jasonoughts]

Sidewinder,

 

No problems my fellow forum poster.

 

Did not think you was pointing any fingers, I did say several posts earlier that I had my answer.

 

Working Tax credits is complicated I know, and have fillled the relevant forms. Was just asking broadly, for any possible advice.

 

Many thanks

[Jasonoughts]

Hi,

 

I have just started work for a new agency in Leeds and there payroll department is paying me through an umbrella company.

 

I had to fill out an expenses form, which included my daily petrol and food costs. This totaled £87.19....

 

I will cut and paste the explanation of how their system works, and show you my payslip.... could someone please explain why I am paying so little tax, NI etc. And if it is Legal?

 

Here is there explanation :-

 

 

First of all, we are an umbrella company and we pay temporary workers on behalf of their recruitment agencies.

As an umbrella company we are able to claim expenses on behalf of temporary workers and offset these against their gross pay in order to reduce their tax and NI payments. Please note that the expenses part on your payslip becomes a non-taxable part of your gross and these are not directly reimbursed to the temporary worker. Only tax saving made on this part of wage being protected from being taxed will get added to the net pay to increase it .These expenses include travel to and from work, a food allowance and other expenses incurred due to the nature of temporary work.* Your meal allowances are based on your hours worked each week.* Any other additional expense incurred by you to carry out your role may be taken into consideration, however, please check with the Customer Service team at Legal-e who will advise you accordingly as you will be required to keep receipts for these.

 

The purpose of an umbrella company is to allow the worker to come home with a higher weekly wage than the standard PAYE system. From the savings made in the tax and NI payments Legal-E put some of this money back into the workers pay to make them better off.

 

 

* Only temporary workers can take advantage of this scheme as permanent employees are not allowed to receive additional tax free allowance in the form of expenses. This means that through Legal-E you are not taxed on your whole gross salary, instead you are taxed on only your taxable income and because of this we must lay out your pay slip in a particular way. To calculate your net pay you will need to look at your taxable amount only deduct NI and tax, then add your expenses equals your net pay.

 

 

 

You can easily check how much better off you are each week from questioned dates by using

Just enter your weekly gross, insert in Gross Income Every 52 weeks, and tick 1 week in Wage Breakdown, enter your correct tax code and calculate.



 

It is not PAYE system so the rules of this system do not apply here.

When it comes to the final figure on the P60 –it sums up all the taxable earnings and not a gross figure as the gross has still got expenses un-deducted from it as they are tax free.

 

 

Here is the payslip break down :-

 

 

Hours = 40.25

Rate = 6.50

Amount = 261.63

 

DEDUCTIONS

 

Tax = 0.25

Employee's Ni = 0.72

 

 

BREAKDOWN

 

Gross pay = 261.62

salary Gross = 261.62

Taxable = 145.00

 

Less

 

Tax = 0.25

NI = 0.72

 

add EXPENSES = 87.19

 

NON-Taxable = 116.61

less

Holiday Accrual = 29.42

 

 

NET PAY = 231.22

 

Hope the payslip details make sense, I could not cut and paste the PDF document, but have typed all relevant details...

 

Hope you can shed some light on this.. I am better off, but need to know if I will owe the tax man?

 

Many Thanks

[honeybee13]

Hello there. This does sound odd if you don't understand umbrella companies, which I don't either.

 

You might want to post on the Employment forum here as well, because in the past we've heard from people who understand all this.

 

My best, HB

[Jasonoughts]

Thanks for the Reply Honeybee,

 

I am actually better off, but want to check that It is legal with the taxman.

 

I will also post on the employment thread.

 

Many thanks