Working for minus £400 in March

**SlipTheJab** · 9 April 2016, 05:09

Originally posted by tarbera View Post

Via umbrella

I have a "friend" he worked 10 days in March, decent rate £550 a day (had a holiday for the other 10 days

Expenses of flights + London flat as he lives in Edinburgh = £2500

His umbrella company notifies him when it's to late about not being able to claim expenses on invoices paid after 6th April for March, got his payslip today for March

Deductions rounded from memory
Tax £2100
EE NI = £380
ER NI = £550
Holiday + fee = £250

Net pay = £2100

As his normal expenses are £2500 (that he can no longer claim), it actually cost him £400 to pay £2900 worth of tax to HMRC

If he could have cancelled his flat in March took a month off - he would be £400 better off

The air was blue in the office today !!!

Yes he is switching ASAP to limited

Part of your role as a contractor is keeping up to date with all this tulip, ignorance of the law is no excuse!

**Contreras** · 9 April 2016, 07:18

Perhaps the friend thinks the Umbrella would have paid the expenses without deductions.

Or perhaps if, after deductions, he was left with £400 for 10 days work that would have been quite all right.

**cojak** · 9 April 2016, 07:40

Tell your "friend" to come to CUK and read up on this stuff. We've known about this for ages.

**MrMarkyMark** · 9 April 2016, 08:02

His umbrella company notifies him when it's to late about not being able to claim expenses on invoices paid after 6th April

Do they tell your friend when to draw breath, also

**TheFaQQer** · 9 April 2016, 08:31

Originally posted by Contreras View Post

Perhaps the friend thinks the Umbrella would have paid the expenses without deductions.

Or perhaps if, after deductions, he was left with £400 for 10 days work that would have been quite all right.

I suspect that the friend was expecting the umbrella company to pay the expenses that were still allowed, ie. those that were incurred before April 6th. However, they aren't allowed to pay the expenses via salary sacrifice, even though they were valid when they were incurred.

The blame is really with HMRC for publishing the guidance on how this will "work" before April 6th.

**TheFaQQer** · 9 April 2016, 08:33

Originally posted by cojak View Post

Tell your "friend" to come to CUK and read up on this stuff. We've known about this for ages.

Citation needed.

Show me a post from "ages ago" that says that umbrella companies will not be able to repay valid expenses that were incurred before the rule change, if that repayment takes place after April 5th. The first I read about it anywhere was when Lucy posted having received guidance from HMRC this week.

**Contreras** · 9 April 2016, 09:26

Originally posted by TheFaQQer View Post

I suspect that the friend was expecting the umbrella company to pay the expenses that were still allowed, ie. those that were incurred before April 6th. However, they aren't allowed to pay the expenses via salary sacrifice, even though they were valid when they were incurred.

What difference would it have made? About £1k saving in tax? So he would still be on less than minimum wage, effectively, and still better off had he cancelled the accommodation and taken the month off.

**SlipTheJab** · 9 April 2016, 10:25

Renting a flat and paying for travel to the tune of 2.5k a month is some commitment, the sort of commitment that would lead to running your own Ltd before now rather than sticking with a brolly until it blew up in your face and then going Ltd... just saying like

**Boo** · 9 April 2016, 10:45

Also, if you pay £250 for a holiday that's not really a tax expenditure as shown in the OP ?

Boo

Working for minus £400 in March