FAQ – ForeTwo Group


Honest, transparent Umbrella and Contractor Accountants who focus on you

[Frequently Asked Questions]

Umbrella Company

If you chose to use an Umbrella company, you will typically be offered an enhanced or uplifted PAYE rate. In other words, a higher amount compared to Agency PAYE, this is known as your Assignment Rate. This rate is different to the rate you get paid from ForeTwo Group because of the additional costs for the umbrella company, which include:

  • Admin Costs
  • Employer National Insurance contributions
  • Employer Workplace Pension Contributions
  • Apprenticeship Levy

The rate paid to the umbrella company by the agency will need to cover the costs of the employer National Insurance contributions. The umbrella company will use this money to pay employer contributions and not deduct the contributions from your gross pay.

The Umbrella company also inform the HMRC what has been paid each pay period, in line with current RTI legislation. You become an employee of the Umbrella company, and are entitled to statutory benefits (e.g. SSP, Maternity/Paternity Pay etc), you will be covered by their insurance and may be offered additional employee benefits.

You may be entitled to claim legitimate business expenses, which can provide a higher degree of tax efficiency compared to Agency PAYE, meaning an increased take-home pay.

For more in-depth information please go to https://www.gov.uk/guidance/working-through-an-umbrella-company

Limited Company

If you choose to set up and operate through your own limited company (sometime referred to as a Personal Service Company or PSC), as a director the company you will typically be offered the enhanced assignment rate (the same rate as Umbrella). It is your responsibility to set aside and pay the correct employee and employer national insurance, taxes, employee, and employer pension contributions, etc and ensure the correct insurances are in place. This is usually done with close support from a specialist Contractor Accountant like ForeTwo, who provide all the necessary advice and support on what to do and when, to ensure you make the most of operating via your own Limited Company. Typically, this is the most tax efficient method of getting paid, made up of a mix of salary, dividends, and expenses. There are rules (known as IR35) around drawing money from the Limited Company, your Contractor Accountant will provide all the knowledge and expertise to help with this.

Please read on for a further explanation of how your pay will be calculated, and some other relevant information.

Umbrella: How your take home pay is calculated

  • ForeTwo receives income from your agency. This is made up of the units you have worked the previous week multiplied by the assignment rate.
  • From the income, we retain our gross margin for the pay period.
  • We then calculate and retain the employer’s national insurance which is 13.8%
  • We then calculate 0.5% apprenticeship levy
  • Once the margin, apprenticeship levy and employer’s national insurance have been retained, we are left with your gross taxable pay inclusive of holiday pay, from which we calculate and retain your employee national insurance contributions of 12% and your PAYE.
  • You are then left with your take home pay, which consists of the hours you worked paid at national minimum wage to show we comply with legislation, then 12.07% holiday pay to show we are complying with that legislation, and the remainder is paid as 1 unit of additional taxable pay (and expenses if you are a true mobile worker who has legitimate mileage claims available).

Most employees are paid weekly and receive their pay a week in arears I.E., the following Friday for the week previously worked.

Holiday Pay

Each time you are paid, ForeTwo calculate an amount of holiday pay for the period worked. This is shown on your payslip as a separate item. It is your choice whether you have the holiday pay paid to you each pay period (Advanced Holiday Pay), or alternatively you can ask ForeTwo to accrue it for you. If we accrue it, the money builds in a holiday pot and you can request to take some or all of the holiday pay at any time. You can choose to switch between both options whenever you like.

Your holiday pay is 12.07% of your taxable pay, which is based on the statutory minimum of 28 days annual leave (incl of bank holidays).

Automatic Enrolment & Our Workplace Pension

The government have made it compulsory for all workplaces to offer their employees a workplace pension, and to also enrol all eligible workers automatically into the scheme.

ForeTwo have chosen NEST as our workplace pension provider. As a government backed pension scheme, you can be sure that your money is safe and that the scheme is compliant with pension legislation.

What is an eligible worker? An eligible worker is an employee who is aged between 22 years of age and state pension age, who usually works in the UK, and who earns above £10000 a year (£192.30 a week).

Following your automatic enrolment into the scheme, NEST will issue you with a pension pack, and you will see a 4% employee and 3% employer contribution coming out of your payment each period, which we will then send to NEST on your behalf to build up your pension pot. The government will also pay 1% of tax relief into your pension pot.

For more information on NEST, please see their website. https://www.nestpensions.org.uk/schemeweb/nest.html

Apprenticeship Levy

This government legislation was introduced on 6th April 2017 and is used by HMRC to help fund apprenticeships schemes across the UK. All employers, including umbrella companies, are legally obliged to comply with the legislation. The legislation stipulates that 0.5% of gross pay taxable must be retained and paid over to HMRC every month. This is retained from the Assignment Rate before calculating your taxable pay and is clearly displayed on your ForeTwo payslip. Some umbrella companies choose to hide this figure, often including it as part of ‘Employment Costs’ which is often made of up the Employers NIC and Apprenticeship Levy amounts.

Your Tax Code

Each year, the HMRC will calculate a tax-free allowance for everybody working in the UK, and subsequently issue each person with a tax code which tells you what your tax-free allowance is for the year. When you start employment with ForeTwo, to enable us to get your tax code correct, you need to send us parts 2 and 3 of your most recent P45 from your last employer.

Please do not send us a P45 from an employer if you have worked/claimed benefits somewhere else after that employment as the information on it will not be accurate. If you don’t have a P45, don’t worry as you will have completed a HMRC starter checklist when you joined us which enables us to send information to the HMRC to notify them that you’re now an employee of ForeTwo. HMRC will then issueus with the correct tax code to use, and any relevant pay and tax figures to be included in your calculations.

Changing Agency / End Client

One benefit of working through ForeTwo is that you can use us to process your pay no matter which agency you get your next assignment through.

You can also have pay from multiple assignments paid together if you have more than 1 job, thus keeping all your tax affairs simple and in one place.