FAQ – Switching from PSC to Umbrella

We appreciate that changes to the way you work and get paid can be stressful. Here at People Group we aim to minimise this by providing you with as much information as possible so that you can make an informed decision. Some of the most frequently asked questions relating to moving from a PSC to umbrella payroll are highlighted below. If you have any additional questions we’ll happily help, just get in touch.

People Group make payments in accordance with your agency’s terms, which ordinarily means payments of one week in arrears on a Friday. If you are currently paid monthly in arrears then it is likely that this will continue. We do offer a facility to make advance payments using our Anytime Wages process. If we’re already working with your agency, we can immediately confirm the current payment terms and any variations to the standard arrangements. If we are not currently engaged with your agency, we will advise payment terms prior to the contract start date.
Yes, it is a legal requirement that all employees in the UK are enrolled into a pension scheme. You will be enrolled following your registration with People Group. The minimum statutory percentages are 3% Employer and 5% Employee contributions payable on qualifying earnings (£166 - £962 per week). Currently we pay the full minimum contribution of 8% as Employer contributions.
You may Opt Out of the auto enrolment pension once your first contribution has been processed by contacting our pension provider NEST.
Yes, as a director/shareholder of your LTD Company you’ll need to complete a self- assessment to include employment income through the umbrella company alongside any salary or dividends from your company. The information required to complete the self-assessment will either be provided to you in a P45 should you leave the umbrella company, or in your P60 end of year statement if you remain employed. HMRC will generally contact you if you are required to complete a self- assessment but being employed by an umbrella company does not automatically require you to complete a self-assessment.
This is unlikely. In our experience agencies typically send us copies of your approved time via a remittance schedule/timesheet. We then complete the invoicing process with the recruitment agency by sending out our own invoice for the services we have supplied as your employer.
Yes, People Group provide comprehensive insurance cover for you as our employee when on site. This includes £10m of Employer & Public/Products liability and £5m for Professional Indemnity.
At present, your LTD Company is your employer and has the responsibility of paying Employer National Insurance contributions (ENICS) on your salary. Although many LTD contractors pay themselves a salary below the tax threshold which then doesn’t attract these contributions. If operating inside IR35 and through an umbrella company, responsibility for paying the ENICs still falls to the employer, in this case the umbrella company. The 'umbrella' contracts with your agency at the Ltd company rate/uplifted rate (the rate per day/hour previously paid to your LTD Company). The umbrella company deducts its employment costs (ENICS, Apprenticeship Levy and employers pension contributions) from the contract income it receives. Therefore, you are not paying the employment costs. The umbrella company also deducts an agreed margin to cover its administration and overheads. The remainder of the contract income is then available as your gross pay, on which the umbrella calculates and deducts your own PAYE tax & NICs before paying them to HMRC.
People Group can support you paying into your personal pension. Our weekly admin margin would increase slightly to cover the administration of People Group enabling you to benefit from tax savings through additional pension contributions. Just let us know the details for your personal pension once you have registered with us, and we’ll arrange the set up with your provider directly.
People Group passes on all tax and NIC savings, including the ENICs under salary sacrifice arrangements. You therefore receive the maximum possible benefit of making personal pension contributions via salary sacrifice arrangements with People Group.
No. Because People Group contracts with your agency rather than your LTD Company, we become responsible for invoicing and paying VAT to HM Revenue and Customs.
Capital items such as laptops and phones are complicated to claim through an employment model like an umbrella company. However, where a genuine business cost such as this exists, we can support you to claim this on your end of year self-assessment. Travel and subsistence expenses reimbursed by your agency may be eligible for tax relief if incurred wholly, reasonably and necessarily in the performance of your job role. Home to work travelling is not eligible whereas site to site travel is. People Group will guide you through the steps necessary to claim such tax relief where appropriate.
No, reimbursed expenses will be billed via People Group, and your agency will pay them to People Group when approved by your client. People Group will need copies of receipts or a claim form in order to pay them to you free from tax & NIC.
No, a life or health insurance policy is personal item and not a genuine business expense so is not claimable as an employee expense.
In each holiday year your minimum statutory holiday entitlement will be 28 days (20 days PLUS 8 Bank & Public Holidays) you may receive additional holiday as part of your Agency Workers rights. Payment of holiday pay is made to People Group as part of the total daily contract income. There are two options in regards to when holiday is paid out: 1 - Paid weekly - the payment in respect of holiday pay is included in addition to your salary with each payment you receive. This means that you receive payment in advance for the time you may subsequently take off as holiday. You will not be paid again when you are on holiday or not at work as you will already have received this payment. Please note under the working time regulations you are required to take a minimum of 4 weeks annual leave, it may also be more tax efficient for you to receive your holiday pay during a week or month that you are not actually working and being paid. 2 - Accrued - this is the default method used by People Group in order to comply with the legislation. The amount of Holiday Pay earned each pay period is accrued in a ‘Holiday Fund’ to be paid out to you when you take time off work. We calculate 12.07% (as a minimum for full year workers) of your gross taxable income, and retain this amount gross (before taxes). This is then taxed when it is paid out to you, in line with the time you are on holiday. You will need to request payment of your holiday by email when you would like this paid out. Holiday pay can be released as a full weekly value, a combination of full weeks’ accrual that you have accrued or as a full pot.
You are entitled to statutory sick pay, so if you are off work for 4 or more days you will need to obtain a doctor’s note and send that in to us. The current allowance is £94.25 per week, (set to rise to £95.85 in April 2020).

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