Parasol Expenses situation from April?

[Money Money Money]

hey rialto i think the company you are talking about is Consultant technologies - they use loans etc and are v dodgy - if your mate insists on using an umbrella then fine but try a different one.

****************************************

cheers JH, but I definitely think its Contractor Umbrella. I've managed to copy this from their website....Any thoughts???



Summary of changes from April 2007
The Government has deemed that, in order to be fully compliant with current and future legislation, umbrella companies must become employer to all of its members. Recent legislation, proposed by the Government to counter tax avoidance, has brought into question the legality of contractors claiming expenses through umbrella companies but this should not apply to contractors working as an employee through an Employment Service Company.

Therefore, in order to give our customers a fully compliant and beneficial service we will be changing the structure of ContractorUmbrella to coincide with the start of the new tax year on 6th April 2007. From this date you will become a flexible employee of ContractorUmbrella with all the employment rights that this entails; you will not be required to do any more than you do now and, despite the additional workload created for us by these Government changes we will not be increasing our fees.

The best news from your point of view is that you will now receive a fixed and guaranteed salary each week (or month). This will be paid regardless of when, or indeed if we get paid by your agency. You will then receive the balance of the income, as now, once we get paid by the agency.

The payment will be for minimum wage (£5.35 per hour) multiplied by the number of hours you have worked within the period. The balance of your invoice will then be paid when funds are received from your agency/client. Those of you who are set up as weekly will receive payment each Thursday and monthly contractors will receive payment on the last Thursday of each month.

In order to comply with UK and EEC Employment Law we will deduct a small amount each week for holiday and sick pay. This will be based on the mandatory 20 days holiday per year and an assumption of 2 weeks sickness per year. The deduction will be pro-rated and will be based on a minimum wage payment. Both deductions will total less than £19 for weekly paid contractors and just over £60 for monthly contractors (based on 37.5 hours per week or 120 hours per month). Obviously this means that you will have a fund available to you if you wish to take holiday and, if you are unlucky enough to fall ill you will have access to an income.

We realise that the Government's actions will mean a change for all of you but there are many benefits to you, not least the security of employmen

Doesn't sound very financially stable to me? How can they pay you without the guarantee of receiving the money themselves?

Surely you will have to build up some sort of held fund which they will pay you out of? Wont they?

Does that mean you can also claim maternity leave?

[Bluebird]

it would be interesying to see the terms of the employment contract.

I would guess they will try and increase the amount of expenses you claim in order to off-set the additional Tax & NI you pay.

Does it say that they AS YOUR EMPLOYER will pay the EMPLOYERS NI CONTRIBUTIONS ??

[ASB]

Does it say that they AS YOUR EMPLOYER will pay the EMPLOYERS NI CONTRIBUTIONS ??

It doesn't need to say that. It is a legal requirement. They will pay the employers NI.

Of course they do this out of the momey you generate and will have to factor it into your payrate.

[jh0711]

yep dead right

you are an employee of brolly company with a contract based on min wage + commision

brolly has contract with agency/end client to supply someone for a rate of £x per hour/day

brolly pays you min wage then commision based on what is left from invoice value after employer costs (holiday pay - which can be held back and paid when you ask for it or slightly more dodgily (but more attractive for the contractor) rolled up and paid each week), other employer costs is Employers NI based on your taxable salary, then they will take their 'fee'

essential this is the same as any normal employer who has employees it pays each week/month out of the profits it has made from deals with its clients - for a normal employer the profit margins are normally much higher than for a brolly. ( I guess except for P4)

ultimately though the new mehtod of calculating the payment makes no difference to the employees take home pay (other than the bit they hold back for holidays and sick pay) I would be very wary of that sort of scheme - holiday pay is fine but sick pay can be SSP which will be claimed back by the employer from the government (same applies to SMP and SPP)

[Bluebird]

The other problem is that if the brolly goes tits up, you've lost your money, but I guess the same could be said of a agency for a ltd co.

The interesting thing is, what happens if you go on "long term" sick or are not working - do they give you a P45 ?, really they should carry on paying you min wage...

Be interesting to see the exact t&cs

[VectraMan]

The best news from your point of view is that you will now receive a fixed and guaranteed salary each week (or month). This will be paid regardless of when, or indeed if we get paid by your agency. You will then receive the balance of the income, as now, once we get paid by the agency.

The payment will be for minimum wage (£5.35 per hour) multiplied by the number of hours you have worked within the period.

In other words, you're not getting a salary if you find yourself on the bench, which is the main advantage of being an employee, and presumably no holiday pay or sick pay either (although sick pay may be different). All they're really doing is protecting you a little bit from late payment (or no payment) from the agency.

[VectraMan]

On the subject of travel expenses:

A lot of people seem quick to put the boot in, but if we're saying that claiming Parasol's offices are your place of work when you go five days a week to another site is dubious, how is a limited company any different? We say our homes are also our normal place of work and so can claim travel to client's sites, but if you're spending five days a week on site and only do an occasional bit of admin work at home, that looks equally dubious.

Seems to me at best this is a grey area.

[jh0711]

ultimately it matters not how you dress up what a brolly does - they will (for a small fee) take your invoice make sure you pay the correct tax and Ni on what you should and allow you to claim expenses.

generally the expenses you are allowed to claim should be the same with each company (unfortuately a very grey area right now)

so the only difference to your take home pay is actually the fee they charge (all other calculations are actual bound by law so cannot be 'fudged' unless you claim bogus expenses)

unfortunately due to legislation the brolly companies now need to ensure that they pay minimum wage (which lets face it is way below the vast majority of real contractors rates) and also holiday pay (which most contractors do not want becuase ultimately it is just coming out of the invoice value)

but to satisfy HMRC hoops have to be jumped through which causes confusion and concern amongst all contractors cos they do not understand how the brolly gets to their invoice net pay from the invoice value and the first reaction is to phone the brolly and complain they are being ripped off.

the vast majority of the large umbrellas will not rip you off and will be above board (there is a big enough market for them to make money legitimately so there is no point in trying to rip a couple of contractors of for a few hundred quid)

so as I allways say if you are new to contracting use brolly for first 12 - 18 months then look at ltd if you are serious about it.

[ASB]

On the subject of travel expenses:

A lot of people seem quick to put the boot in, but if we're saying that claiming Parasol's offices are your place of work when you go five days a week to another site is dubious, how is a limited company any different? We say our homes are also our normal place of work and so can claim travel to client's sites, but if you're spending five days a week on site and only do an occasional bit of admin work at home, that looks equally dubious.

Seems to me at best this is a grey area.

It is not actually any different, the same rules apply. It's just that they can be to the benefit.

The question boils down to "what is your normal place of work". In the case of the average contractor they can argue that is their home because substantive duties - the management of the company takes place there. Substantive does not mean substantial although the IR have been known to try and interpret it that way.

I have never had a problem with the IR accepting this in my case, however I believe there have been cases where it has not been accepted. There are also other rules for employees who do not have a normal place of work.

So yes, it is a bit grey.

[tim123]

(holiday pay - which can be held back and paid when you ask for it or slightly more dodgily (but more attractive for the contractor) rolled up and paid each week),

Brollies have been told by the courts that they may NOT do this. Any one that does is asking for trouble.

tim