FAQs
What do I need to know about IR35?
HMRC introduced new processes for IR35 in 2012. Understanding off-payroll working (IR35) rules for clients, workers (contractors), and their intermediaries is critical for tax compliance. Although the rules are unlikely to apply if an umbrella company employs you, some clients may assess whether they apply to the role. These rules apply when workers contract through their limited company or an intermediary.
We’ll guide you through the necessary payroll procedures and any potential changes to your tax obligations. We simplify the process, ensuring you have a clear understanding.
What parts of the Agency Workers Regulation do I need to be aware of as a contractor/temp?
The Working Time Regulations 1998 cover the following working time entitlements: duration of working time, night work, holiday entitlements, rest periods, and breaks. In addition to existing rights, after 12 weeks in a given job, an agency worker will be entitled to the same terms and conditions relating to the duration of working time, night work, rest periods and rest breaks, annual leave, and be paid at the appropriate overtime rate as he or she would have received as a direct employee.
Magic Umbrella tracks your working hours to ensure compliance with Working Time Regulations. We help you manage your time efficiently, making sure you receive the rest breaks and maximum working hours set by law.
How do we ensure compliance with AWR?
Agency Workers Regulation (AWR) came into force on 1 October 2011 to ensure that the working and employment conditions of contractors and freelancers engaged through recruitment agencies are no different from a ‘comparable worker’. The Regulations give agency workers the entitlement to the same treatment as a full-time employee doing the same job in the same workplace and working conditions if they complete a qualifying period of 12 weeks in a particular job. The entitlements cover basic pay, bonuses, working time, holiday and additional leave entitlements and benefits, including pregnancy/maternity and other human employment rights protection.
Repeal of the Swedish derogation:
From 6 April 2020, a permanent contract giving pay between assignments no longer allows a worker to opt out of equal pay entitlements. All agency workers are entitled to the same pay as permanent employees of the hirer after twelve weeks in the same role with the same hirer.
From 6 April 2020, a permanent contract giving pay between assignments no longer allows a worker to opt out of equal pay entitlements. All agency workers are entitled to the same pay as permanent employees of the hirer after twelve weeks in the same role with the same hirer.
Magic Umbrella simplifies tracking the employee’s 12-week qualifying period for agency work. We send you friendly reminders as you approach the mark, ensuring you receive the full entitlements you deserve. With Magic Umbrella, equal treatment and benefits are clear and accessible.
What is my Holiday Pay Entitlement?
In relation to paid holiday leave, all workers have a statutory entitlement to 5.6 weeks per year (based on their working pattern – somebody working five days a week is entitled to 5.6 x 5 = 28 days), which can include bank and public holidays. As with rest breaks, if a hirer would have given a more generous contractual leave entitlement to the agency worker if recruited directly to fill the same job, the agency worker concerned should receive the same
enhanced entitlement once the 12-week qualifying period has elapsed.
Magic Umbrella tracks and calculates your holiday pay entitlement accurately, ensuring you receive your due benefits. We make it easy for you to request and manage your holidays, ensuring compliance with statutory requirements.
Subject to signing a written consent you can now opt to have your holiday pay paid weekly, please take note;
o That you need to still take your holiday days (but with no additional pay)
o Rolled up holiday will incur you additional National insurance costs.
o Rolled up pay may result in higher PAYE tax being incurred.
What is the Employment Intermediaries’ Legislation?
Introduced in April 2014, with the reporting function operational as of April 2015, it centres on whether someone who operates through an intermediary is genuinely self-employed. The intermediary is responsible for reporting to HMRC each quarter on how each worker is engaged, be it PAYE, on a self-employed basis, or through a PSC. Since heavy fines exist for those who don’t report this information accurately, compliance with this specific legislation is vital to ensure workers’ taxes and National Insurance are paid correctly.
What do National Insurance Contributions mean (NICs)?
Typically, ‘employment costs’ refer to Employer’s National Insurance Contributions (NICs) and the Apprenticeship Levy, which is calculated at 14.3% (after allowances). While the processes involved are relatively straightforward, one of the biggest challenges in payroll processing procedures is the deductions on payslips in a compliant and efficient way. Just like all employers, Umbrella Companies are legally obliged to automatically calculate the National Insurance
Contributions (NICs) you need to pay and deduct them from your pay before passing on your take-home pay.
Being paid through Magic Umbrella ensures accurate calculation and timely submission of National Insurance Contributions for all contractors. We keep track of rate changes and regulations to maintain compliance and provide peace of mind.
How does Auto-Enrolment Pension affect me?
In October 2012, the UK government began phasing in auto-enrolment for workplace pensions. Employers had to adapt to new administrative responsibilities as auto-enrolment required employers to automatically enrol their eligible employees into a qualifying workplace pension scheme and make contributions towards it. Overall, the changes in 2012 represented a significant shift in the UK’s approach to retirement savings, aiming to improve financial security for future retirees including temp and contract workers.
Magic Umbrella partners with Options Pensions to provide you with a trusted auto enrolment scheme, that unless you opt out of, you will commence contributing to after your 12 week qualifying period, helping you plan for a secure retirement. You can access an illustration of your pension contributions and fund growth via your Magic app.
How do we ensure Equality Act 2010 Compliance?
The Equality Act 2010 protects people from unfair treatment and discrimination in the workplace and creates a more equal society. It brings together in one single Act a range of anti-discrimination laws passed over the last 40 years to help people understand their rights and challenge discrimination while strengthening protection in some situations. It sets out the different ways it’s unlawful to treat someone.
Magic Umbrella monitors legal changes closely, keeping you informed. We aim to promote compliance from the start, avoiding any enforcement issues. We provide the necessary support to ensure that individuals and businesses we work with understand and follow the law, including the Equality Act 2010. We simplify compliance so you can focus on what matters most.
How do we keep your personal data secure?
Your personal data is stored securely and managed according to our strict policies, with no sharing with third parties unless you provide explicit consent. We guarantee that your data remains confidential, with transparency on how it’s used, so you’re always informed and in control.
We have implemented robust data protection policies, conducted regular data protection impact assessments (DPIAs), and established efficient protocols for handling data breaches, including notification to the Information Commissioner’s Office (ICO) where required. Our policies are all in line with the UK General Data Protection Regulation (UK GDPR), in conjunction with the Data Protection Act 2018 (DPA 2018), governs the lawful, fair, and transparent processing of personal data for businesses.