Umbrella company working

BASFORDLAD

Thanks people for your help in this.

Found out today that he will have to pay Employers NIC as well

Did some calculations and he will be better of with this. The agency will also pay £1.00 per more per hour for going through this umbrella company

Based on claiming the full susistance rates and being able to claim 30 miles a day. Works out about £50-56 a week better off

However he then told me hes only earned £2500k in this tax year of taxable income and is awaiting his p45 (which will put him on an accumlative code)

Now this has put a real spanner in the works as this will surely negate the tax saving benefits , due to where we are in the tax years.

I know he will obviously be able to save against NI, but if there is no or very little tax due, then its confusing the hell out of me.

There is 18 weeks left in the tax year, 2500 has been earned so far

he could earn (rough guess) £6930 straight by Umbrella
or 6300 by paye

Therefore total earned in tax year would be around 9200/8800/.

So is it going to be worth it?, is he going to save enough by using umbrella (petrol expenses etc), or is he going to loose out due to lack or earnings in this tax year?

BASFORDLAD

Well the figures are in and he would be 191 better of though an umbrella, but that's until the end of the tax year. However he would have to deduct employers nic so it diddly squat!!!

HappyMJ

BASFORDLAD wrote: »

Well the figures are in and he would be 191 better of though an umbrella, but that's until the end of the tax year. However he would have to deduct employers nic so it diddly squat!!!

and if he set up a limited company he could pay himself £144 a week and not have to pay any employer or employee national insurance contributions. The remainder of the profit can paid out as dividends taxed at 20%....as long as he meets the requirements of IR35 which is a tax rule to prevent this set up. He needs to be a genuine contractor with an element of risk and control over how the job is done, when and who does it.

farmerboy

You can claim milage if your on PAYE, If you ask your local tax office they will tell you how. You'll also accrue holiday pay rather than having it deducted and paid back.

The agency need to pay more than £1/hr to make it really benificial. TBH I pay my accountant less for sorting out my account for 3 businesses than these scum want to do just 1 ascpect of my earnings.