Umbrella company working

BASFORDLAD

Hi Guys

Have been asked to post this on someones behalf, can people check my figures please?

Can someone help me with some figures please to see if its going to be better of doing some work under an umbrella company rather direct through an agency

Ok so its going to be £10 per hour, say 36 paid hours per week

He will doing 30 miles per day , with an allowance of 45p per mile

The is a £10 per day subsisitance allowance (for which i just need to buy a bottle of water for say 50p in order to claim) So in effect this is £50 tax deductable before tax and ni?

Their weekly administration fee is £28.41 (Net cost £16.97)

So i assume this 28.41 is again deductable before tax and nil

So its £67.50 per week for fuel
£350.00 for basic wage

Then £350 minus the £50.00 & £28.41.

So in effect i am taxed on £271.59 -which assuming normal tax code and not taking it affect any other earnings would be

£232.97 and then £67.50 for the fuel allowance means a take home pay of approx 305?

Plus they pay you portion of your holiday pay each week?

People please correct me if ive got this wrong

anniecave

are they a UK umbrella company (not based offshore for example Isle of Man)? If so the umbrella will need to pay employers NI at 13.8% on all your taxable earnings - so they will take this into their calculations when working out how much to pay you.

Also any holiday pay will come out of the amounts you are paid so it's not payable in addition as such....

BASFORDLAD

Yes its a registered UK company..

So what's the idea with holiday pay with umbrella companies as opposed to direct paye?

Two4Tuesday

BASFORDLAD wrote: »

The is a £10 per day subsisitance allowance (for which i just need to buy a bottle of water for say 50p in order to claim) So in effect this is £50 tax deductable before tax and ni?

The subsistence claim is meant to be for what you actually spend. The umbrella company should tell you that.

They might not need receipts now, but if they pick yours for an audit you will have to back up all claims with receipts or else it has to go to HMRC for further action.

I prefer not to fiddle expenses but if you are unlucky enough to be caught out you will face the penalty, not the umbrella company.

BASFORDLAD

He is just going on what he was told. But thanks

anniecave

I'd ask the umbrella company directly how they calculate holiday pay

With a normal company if you're on payroll and salaried, then you are paid your salary and employers NI is an expense for the company that they just pay separately as a cost to the business just like any other cost. You get an allocation of holiday days and you take them throughout the year as you want.

With a payroll company, the payroll company's job is to just run payroll for you, so they have take the cost of employers NI off, and if they pay you holiday pay then it will need to come out of your pay somehow.

Two4Tuesday

Assuming your friend spends and claims £10 per day in expenses:
£350 per week -£50 subsistence -£67.50 fuel - £28.41 fee = £204.09 before tax

Then deduct employers NI, employees NI, Tax :
take home is about £182.50 + £50 + £67.50 = £300

keyser666

Two4Tuesday wrote: »

The subsistence claim is meant to be for what you actually spend. The umbrella company should tell you that.

They might not need receipts now, but if they pick yours for an audit you will have to back up all claims with receipts or else it has to go to HMRC for further action.

I prefer not to fiddle expenses but if you are unlucky enough to be caught out you will face the penalty, not the umbrella company.

Classed as unreceipted expenses now.

Also OP if including travel and work time it is 10hrs or more then it is £14 daily

iwb100

My understanding of subsistence payments with umbrella companies is as follows...

The umbrella company has an agreed rate with HMRC and the umbrella company does now not need to check with their contractors anymore (before they had to do "random sampling" of receipts in order to maintain the agreed dispensation with HMRC).

However, that is the HMRC/Umbrella company agreement.

In my understanding that DOES NOT extend to the contractor and HMRC are within their rights to audit any contractor's receipts for the past 5 years. Even IF they were working through an Umbrella Company. And if that person was claiming £10 a day then they'd better have receipts for that amount for every single day they claimed it. I think some umbrella's simply push all their contractors through with their maximum subsistence rates, to save admin for the UC and also to maximise contractors take home salaries. However, as far as I know it is not the UC's responsibility to monitor their contractors tax situation and IF you are spending 50p a day that is ALL as an individual you are entitled to, not the full £10 the UC has negotiated with HMRC. And if audited, it is YOU the contractor who has to prove your subsistence.

My understanding at least......

Who?_me?

This sounds like a company I know that is named after a mythical tall person. It is based in the UK in london.
The holiday pay will be shown on your pay slip at about 12% . I don't put in any other epxenses than fuel because I dont like the system and am only using it because I have to. You have to scan in fuel reciepts or post them, but any other you keep yourself. Seeing as I am not paying tax because I haven't been working, I object to haveing to pay to be paid.

HappyMJ

Who?_me? wrote: »

This sounds like a company I know that is named after a mythical tall person. It is based in the UK in london.
The holiday pay will be shown on your pay slip at about 12% . I don't put in any other epxenses than fuel because I dont like the system and am only using it because I have to. You have to scan in fuel reciepts or post them, but any other you keep yourself. Seeing as I am not paying tax because I haven't been working, I object to haveing to pay to be paid.

Then set up your own limited company. It's cheap to do but a little time consuming with all the forms that need filling in on the correct dates.