Let’s talk about Umbrella Companies

This post will be discussing and explaining Veterinary umbrella companies for those who want some more information. We often are contacted by locum vets and vet nurses who cannot understand their payslip to start with. Having worked in Recruitment for almost 25 years I still struggle to understand some of them myself.  For the record this article will be explained as simply as we can.  If you want a formally written and in depth description there is plenty of information online for you to research. Post IR35 in April last year all the Veterinary groups will only use FSCA approved umbrella companies. The purpose of the FCSA is to raise standards and promote compliance within the sector. I have put a link to them at the bottom of the article. The vet groups generally use 5 or 6 umbrella companies each. The main ones listed below:

1. Churchill Knight Umbrella
2. I4 Group
3. Danbro
4. Brookson
5. Exceed Outsourcing

Introduction:

The basic purpose of an umbrella company is to act as an independent payroll or accounts provider to locums. If you are moving around different vet practices doing odd days or weeks you would forever be submitting P45’s and paying emergency tax. By using an umbrella company, who are acting as a fixed payroll partner. You are now free to move around as many different employers as you wish- This could be is completely different sectors btw…. So let’s say you work at Vets4Pets on a Monday and Tuesday, an IVC Practice on Wednesday and Thursday and then so some shifts with the PDSA they would all be paid as the same week to you the locum.

In essence all umbrella companies should charge exactly the same taxable fees to contractors. (Another name for Locum Veterinary Surgeons and Veterinary Nurses/ RVN’s / VCA’s) The only difference should be in what the umbrella company charges as their fee per week. However from our experience this often not the case. One of the reasons for us writing this article. Umbrella companies usually charge a weekly fee for their services which range from £20-25 per week.  Depending on how much you earn this can be higher, but this is unlikely in the vet profession. Some charge a percentage of how much you earn. The ones we listed above all charge a weekly fee.

Fees and taxes explained:

When you work as a permanent member of staff in the UK you are working via P.A.Y.E Or pay as you earn. Your employer deducts you employee National insurance of 12% (as of April 2022) and your tax rate (Depending on how much you earn). You will then receive the ‘Net’ or after tax+ NI.  The employer then has to pay employers N.I of 13.8% in addition to what you pay.

When you work via an umbrella company you have to pay your own Tax + NI and you have to pay employers NI on top, and you have to pay the umbrella company their fee. This therefore makes it much more costly for you the locum vet or locum RVN. This second NI costing is often not mentioned by agencies as they don’t want to make it sound so expensive. But we’re telling you straight!

This is one of the reasons why locum rates have gone up so much since last April. Most professional locums were working via ltd companies until then. And before the legislation changed in 2013 many were working as self employed.  That said- veterinary nurses now charging between £16-21 per hour compared with 11-13 per hour 5 years ago . Also vets charging £330- 430 per day, you can see that there has been a more than commensurate increase to counter this.

One important note is that there is a threshold at which you pay Tax which is currently £12,570 per year. For NI the primary threshold is £9,568 per year. You do not pay anything on this amount- only what you earn over it. This does bring down the tax amount paid each week significantly.

Different umbrella companies payslips can often pay you a basic rate, then include multiple other rates on the payslips which make them very difficult to work out what exactly you’re being paid. It would be far easier to just show you your tax, NI and holiday contributions. We have queried this  and complained on multiple occasions but this is just the way that the choose to do it. If you’re unsure speak to one of our consultants about it and we can go through it with you. Or call the umbrella company and ask to speak to a senior member of the team who will be able to explain there reasons.

With this is mind all umbrella companies should be processing the same taxes but as I said earlier we find that some are more expensive than others. Weekly fees change somewhat but there is definitely more variants than this. So again we advise asking for estimates from them when you are signing up. We also find that even though they are all doing the same jobs some are much better than others.  Do they answer the phone when you call them, do they pay you promptly, are they happy to discuss your quereies?

Conclusion:

We advise always speaking to two or three umbrella companies and ask them what you are likely to take home.  You can base this off an average amount of hours worked and your hourly/ daily rate.

https://www.fcsa.org.uk/