Umbrella companies...

TheCyclingProgrammer

Fleur_OHagan wrote: »

My umbrella company takes NI employer contributions from my top line as well as their Management fees and the employee NI. In all they take about a third of my top line after 20% tax. Is any of this a tax deductable expense?

I'd normally say you should start your own thread instead of hijacking others but seeing as it's a simple question...no, it isn't. Tax is not a tax deductible business expense. Neither are the umbrella fees because you aren't running a business - the umbrella is your employer and they simply pay you net of any employers NIC and other fees.

semma19

This is my thread and I have a further question.
The agency who sourced me the contract has suddenly turned around and said that the day rate for using my ltd is less than the 'umbrella rate'. E.g. advertised at £200 a day 'umbrella rate' but actually paying £170 because I am using my ltd cmpany. (Made up figures but it's nearly 25% less as a gross figure).

Um... why? How? Is that even legal?

Potbellypig

stephanieemma wrote: »

This is my thread and I have a further question.
The agency who sourced me the contract has suddenly turned around and said that the day rate for using my ltd is less than the 'umbrella rate'. E.g. advertised at £200 a day 'umbrella rate' but actually paying £170 because I am using my ltd cmpany. (Made up figures but it's nearly 25% less as a gross figure).

Um... why? How? Is that even legal?

Ask your agency, but yes, you're a contractor. You don't have any of these employment legalities regarding how rates can be paid or advertised. You're effectively self employed remember.



For example, you could have a contract for £1,000,000 a day for 6 months and then your next contract could be a penny a day. Extreme example, of course.

TheCyclingProgrammer

stephanieemma wrote: »

This is my thread and I have a further question.
The agency who sourced me the contract has suddenly turned around and said that the day rate for using my ltd is less than the 'umbrella rate'. E.g. advertised at £200 a day 'umbrella rate' but actually paying £170 because I am using my ltd cmpany. (Made up figures but it's nearly 25% less as a gross figure).

Um... why? How? Is that even legal?

They can offer whatever terms they like.

Of course, I’m sure it’s perfectly innocent and I’m sure it’s not to encourage you to use their chosen umbrella whom I sure are not offering a referral fee to the agent. :silenced:

semma19

Yes I'm well aware that day rates will change between contracts.

My point is they're penalising me for using my own ltd. At no point did they tell me the 'lts company day rate' - except on the contract the day before I'm due to start.

It's not on.

Potbellypig

stephanieemma wrote: »

Yes I'm well aware that day rates will change between contracts.

My point is they're penalising me for using my own ltd. At no point did they tell me the 'lts company day rate' - except on the contract the day before I'm due to start.

It's not on.

I think you need to take a step back and understand a little more about contracting.

semma19

What do you mean? I've done lots of contracts and this has never happened to me before. It's just the first one inside IR35. It's not right that they advertise a day rate, then reduce it the day before I'm meant to start (having gone through weeks of paperwork) just because I wanted to get paid via my company (according to all regulations - I did get advice about ltd company/IR35 implications) and not an umbrella. This is NOT normal.

Potbellypig

stephanieemma wrote: »

What do you mean? I've done lots of contracts and this has never happened to me before. It's just the first one inside IR35. It's not right that they advertise a day rate, then reduce it the day before I'm meant to start (having gone through weeks of paperwork) just because I wanted to get paid via my company (according to all regulations - I did get advice about ltd company/IR35 implications) and not an umbrella. This is NOT normal.

What answer to your question would you like to read?

unforeseen

Ltd company day rate on an inside IR35 contract is lower because they deduct NI and tax from the rate before paying your company as these are paid direct by the agency to HMRC.

Tax will be deducted at 20% as they do not have your tax details.

ETA

Above not quite right. The headline rate drops by the amount of employer NI as the employer has to pay this. The the amount you get paid will have employee NI and 20% tax deducted before payment. This how it worked with me when working for the NHS.