Frequently Asked Questions
What is a payroll umbrella company?
This way of working differs from limited company working in that the freelance worker does not own shares in the umbrella company and is one of many such workers employed by the company.
Competex Pro is the only payroll umbrella company that specialises in looking after interim managers and independent professionals.
What is the difference between Competex Pro and other payroll umbrella companies?
How much does it cost to work through Competex Pro?
Our administration margin is £120 per month, deducted from the first payslip each month irrespective of how many times you are paid within the month.
We discount this fee by 20% for Competex Ltd clients with active limited companies and for candidates working through agencies with automated time sheet and accelerated payment systems.
The full margin of £120 is equivalent to £54 paid out of income taxed at 40%, and we are confident that you will more than recoup this expense by working through Competex Pro rather than through any other payroll umbrella company.
Why will I be better off by working through Competex Pro?
We have created a structure that allows our ‘employees’ to claim all normal expenses of employment out of their ring-fenced fund, before processing salary and therefore tax free. This is in contrast to other payroll umbrella companies that restrict expenses to those claimed from the end client.
What are the implications of work in the public sector through my own company?
The exception is that if you also carry out non-IR35 private sector work in the same year, or in the following year, you will be able use these funds to pay the company running costs.
Why does my agency insist I work through an umbrella company?
Although it is still possible to work through a limited company in the public sector, the new ‘Off-Payroll Working’ legislation is making this way of working extremely onerous for all concerned and there are still a number of administrative issues not yet fully resolved by HMRC.
The payroll umbrella company model is therefore becoming the more favoured option by all concerned in light of the new changes, being the most straightforward solution to the problems created by the new legislation.
Competex Pro handles all the commercial, employment, taxation, and statutory issues associated with the hire of interims and consultants, so that your agency or end-client doesn’t have to.
How long does it take to get set up with Competex Pro?
What are the steps taken to get set up and ready for work?
- When you secure your assignment, you need to negotiate fees and expenses, and the number of days each week that you will be working.
- You then need to register with us online, submitting your details and those of your agency or end-client. (However, please feel free to telephone us if you have any queries.)
- We will ask you for and you will need to send us normal ID documentation.
- We will make contact with your agency ahead of signing contracts.
- We will register you on our payroll software.
- We will issue a contract of employment to you, the terms of which may be viewed here.
- We will sign a service contract with your agency (or end-client if you are working directly for them).
What happens once I am on assignment?
If you are working directly for the end client, so also Competex Pro will work directly to the end client.
Once we receive your timesheets and expense claim forms, and we have received payment from your agency or end client, we will pay you and issue you a payslip. Some agencies operate accelerated payment systems in which case you can expect to be paid extremely promptly.
Can I move to Competex Pro from another payroll umbrella company part way through an assignment?
What happens after I have finished my assignment?
You would of course be very welcome to return to Competex Pro at a later date if the opportunity arises.
Does Competex Pro provide work-finding services?
You have no obligations to the company between assignments and it follows that you are not obliged to keep yourself available for work between assignments.
The onus, therefore, is on you to find your own work, and Competex Pro will of course normally be very happy to provide the framework within which you can operate. However, please be aware that we are under no obligation to accept work for you, and to arrange for you to work through us, if the nature of an assignment is not acceptable to us.
Should I get set up with Competex Pro now or wait till I get my assignment?
Can I start work before I am registered with Competex Pro?
How is my pay structured?
- Your pension contributions if applicable (paid free of tax)
- Any other expenses of employment due to you and paid free of tax, but only if allowable by HMRC.
- Employer’s National Insurance on your salary
- Any other costs of employment that may be applicable (e.g. Automatic Enrolment, Apprenticeship Levy)
The entire remainder of the fund is paid to you as salary, from which tax and employee’s National Insurance is deducted.
Your salary is calculated in three parts:
- Basic pay for the time worked, calculated at the national minimum wage rate. The use of national minimum wage is an expedient used by all umbrella companies, enabling them to comply with all the legislation associated with flexible working and the AgencyRegulations. It does not affect the total amount paid to you as an employee.
- Holiday pay, based on the national minimum wage. Since you are classed as an employee with flexible working arrangements, we are obliged to pay holiday pay. This is paid to you month by month based on the number of days worked in the month, so ensuring that you are paid the maximum funds available as early as possible.
- Bonus, which represents the entire remaining balance of all available funds.
Although calculated as described above, the basic pay and bonus are brought together as a single figure referred to as ‘pay’ on your payslip.
How does the ‘ring fenced’ fund work?
When you work through a payroll umbrella company, you work as an employee of the umbrella company but now, unusually, all the fees you earn (less a small margin take out of these fees by the umbrella company to cover its costs) are ‘ring-fenced’ and used exclusively to pay your salary, the statutory costs of employing you (eg Employer’s NI, Automatic Enrolment, and Apprenticeship Levy) and any personal tax-free expenses.
Whilst now your salary is not fixed, you do now have the entire ‘ring fenced’ fund to your name. But it has to pay for everything. Your salary is now a flexible salary and the amount that is paid as actual salary out of the ‘ring fenced’ fund depends on the personal tax-free expenses you can claim and the costs of employment paid on your behalf. And of course this all ultimately depends on your personal earning power.
What expenses can I claim free of tax and National Insurance?
To the extent that expenses may have been claimed from the client in excess of the expenses that are permitted to be paid to you by HMRC, then the excess will be added to your fee income and taxed in the normal way.
Do I need to take out insurance?
- Professional indemnity: £1,500,000 limit of indemnity
- Employer’s liability: £10,000,000 limit of indemnity
- Public liability: £10,000,000 limit of indemnity
Can I pay personal pension contributions out of pre-tax income?
If you feel that any questions have not been answered adequately, or if you have any other questions that you would like us to answer, do please feel free to email us.