Umbrella Company not paying tax

Jagang

Hi,
I have recently started working for an agency as a second job, as seems to be the norm now I am paid via an umbrella company.

My only real concerns with this arrangement is my tax, I earn over £25,000 at my full time job so assumed I would be paying around 22% tax on my second job earnings.

So far I have earned £773.18 Gross from my second job and have only paid £4.80 in tax. I know I get expenses for travel, food and other out of pocket costs (I fill out the forms for this) however I dont feel it comes anywhere close to my tax liability.

So since I am technically an employee of the umbrella payment company, who pay me through a PAYE system, if I am ot paying enough tax who is responsible for this me or the payment company?

In the contract I received from them it specifically states that they guarantee to deduct relevant monies each week from me and pay them to HMRC each month. So if they fail to deduct the relevant money does this then become their problem or does it remain mine??

My main concern is being stung for a large tax payment later in the year.

Also if I decide I am not happy with the service from the umbrella company am I entitled to switch to another of my choosing or can the agency dictate which one I use???

Thanks in advance for any help you can give
Jay

P.S.
Can they make me pay my own NIERS?
Surely since they are my employer they should make this payment not me, I have been through all the calculations and they are definitely making me pay it.

Gavin83

If you haven't paid enough tax HMRC will chase you for it at the end of the tax year. It's your tax and therefore your responsibility. I'm assuming your take home pay has been inflated anyway due to the lack of tax being deducted.

Haven't you told the agency you don't think your paying enough tax?

Jagang

Hi cheers for the quick response, I finally started getting wage slips from them this week and so have been able to see what has been happening, I figured that it would be down to me in the end but figured it was worth checking first.

The main thing that bugs me is that I am paying this company to take care of all of this for me yet I am responsible for any mistakes that they make surely they should hold responsibility for their errors even if it is with my income after all it is their mistake not mine.

keyser666

Gavin83 wrote: »

If you haven't paid enough tax HMRC will chase you for it at the end of the tax year. It's your tax and therefore your responsibility. I'm assuming your take home pay has been inflated anyway due to the lack of tax being deducted.

Haven't you told the agency you don't think your paying enough tax?

Not sure that is correct, if they are being paid by the umbrella company they are employed by the umbrella company and they are liable for the tax.

notanewuser

What tax code is on your payslips?

Jagang

I have just spoke to SDC who assure me that all relevant taxes are being paid.
They claim that they are able to reduce my tax liabilities through savvy use of exemptions and expenses and I suppose this is partly what they are paid for.

I also received today a letter from HMRC saying that SDC are to use the tax code 1006L, which is the one that they are using.

As I said above my only real concern is being stung for a lump sum tax payment later in the year.

Gross Pay YTD £773.18
Tax Paid YTD £4.80

I calculate the tax I have currently paid on my second job to be around 0.6% (I think that's right) which to me seems very very low.

Jagang

Is it worth my whilst (if just for piece of mind) calling HMRC an speaking to them about his matter??

notanewuser

Sounds like something may have got confused here, and that both jobs are giving you your full tax code. HMRC may believe that the brella company is your only employer.

Did you complete a p46 for the second job?

AbbieCadabra

Jagang wrote: »

Can they make me pay my own NIERS?
Surely since they are my employer they should make this payment not me, I have been through all the calculations and they are definitely making me pay it.

there's a loophole in current legislation/rules that means, yes, they can make you pay employers NI, see this thread, you're not on your own with this issue.

Jagang

my last payslip for my main job shows 1006L. I never filled out a p46 when starting my second job and when i spoke to them they said they are fully aware that they are not my main employer.

Derwent

If they are paying you a dividend payment rather than a wage from the umbrella company then it's perfectly feasible that you would pay little or no tax on those dividends providing that corporation tax has first been deducted from the company's profits.