Umbrella Company - Holiday Pay

[Ribeye27]

I've been contracting through an umbrella company for the last 6 months. During this time I've built up a tidy sum in holiday pay which they have been holding back. I have now decided to go limited company. The umbrella company now wants to take out National Insurance and PAYE from my holiday pay before passing it on to me.

My question is, as I am now self employed and therefore responsible for my own tax affairs, is it right that they should do this ?

[stek]

Yes

[cojak]

They have to pay holiday pay and NI up to the point that you worked for them.

This is the way Umbrellas work.

[northernladuk]

Stay brolly.

[slatt]

Yes, the money they put into your holiday pot comes from your pre tax earnings, so when they pay it out they need to tax it in the normal way.

You can't take it as "new" income and account for it as part of your Ltd company as it was earned during your employment through the umbrella.

[Sausage Surprise]

I've been contracting through an umbrella company for the last 6 months. During this time I've built up a tidy sum in holiday pay which they have been holding back. I have now decided to go limited company. The umbrella company now wants to take out National Insurance and PAYE from my holiday pay before passing it on to me.

My question is, as I am now self employed and therefore responsible for my own tax affairs, is it right that they should do this ?

Hmmm...

[sal]

Hmmm...

That's why

Stay brolly.

+1

OP doesn't seems to have much clue what it means to operate through your own ltd.

[LisaContractorUmbrella]

As everyone has said - yes - the money that will be paid to you is classed as taxable income as it would be in any other employment