Take Home Pay

[Beefy198]

I'm slightly disappointed with the original post.

We all know that if you go through an umbrella company, then using their magic dispensation, you can claim what you want with no receipts needed, so you can just maximise your income that way - claiming expenses without needing any receipts (or even spending the money!) is the way forward, surely?

Shame on you, Lisa, for forgetting to highlight how the magic dispensation works for umbrellas!

To be fair, I now know a couple of people that go through brollies and the only ones who seem to think that they claim a blanket expense no matter if they've spent it or not are with some of the *ahem* bigger umbrella companies - presumably they don't give a sh*t if they land their "customers" on the wrong side of a HMRC investigation.

The ones with some of what I would class as the smaller outfits don't seem to use a dispensation as a marketing tool - presumably because for them happy contractors are important and need to keep them honest. I know that I would rather go through a brolly that checked over my expense claim and sometimes disallowed items, since it's what I would be paying them to do!

And it's always amused me that the big agencies, who are so scared of being on the wrong side of debt transfer legislation tell contractors that they HAVE to use the big brollies (with their dodgy expense rules) to get paid

[TheFaQQer]

To be fair, I now know a couple of people that go through brollies and the only ones who seem to think that they claim a blanket expense no matter if they've spent it or not are with some of the *ahem* bigger umbrella companies - presumably they don't give a sh*t if they land their "customers" on the wrong side of a HMRC investigation.

Indeed, there are some large ones that advocate this all the time. It's fine to recommend it, because they don't get hit with any of the problems when HMRC come calling.

[LisaContractorUmbrella]

I'm slightly disappointed with the original post.

We all know that if you go through an umbrella company, then using their magic dispensation, you can claim what you want with no receipts needed, so you can just maximise your income that way - claiming expenses without needing any receipts (or even spending the money!) is the way forward, surely?

Shame on you, Lisa, for forgetting to highlight how the magic dispensation works for umbrellas!

Sorry FaQQer Of course I should have explained about the magical dispensation - just mention it when HMR&C come calling. I am sure that one of them will explain - there is no Harry Potter, no invisibility cloaks and no magical dispensations - they may pat you on the head at this point.

[Lewis]

They (QDOS) have lowered their minimum salary requirement to (IIRC) £6k. There are a couple of posts here from QDOS saying exactly this if you search for QDOS posting. I intend to do this from April 6th. I'm currently paying £10k salary but I now see no reason to do so.

Yes and if you pay yourself this lower salary then your excess goes up to reflect the fact they consider there is more chance of an investigation. I have the TLC35 product myself and have spoken to them about this.

[MPwannadecentincome]

If you are paid via PAYE you will be liable for income tax and national insurance contributions. Your earnings up to £34,800, less your tax free allowance, will be taxed at 20%; everything above this will be taxed at 40%. National insurance rates are 11% for employee's and 12.8% for employer's on earnings above £105 per week. HTH

Actually to be fair on the PAYE illustration and to keep things in perspective, there is an UPPER limit on the EMPLOYEE National Insurance - I think the currect figure is around £40,000 per annum, above that limit the NI rate is 1%.

I agree with the general point of the post though - trying to get 80% + is risky - I am now being hassled by a company called "Sunday" to evaluate their services...

[Churchill]

There has been quite a lot of chat on the board, over the last few months, about the percentage take home pay that can be 'achieved' using different umbrella companies, EBTs, limited company etc etc.

As things stand at the moment, if you do not want to attract any undue attention from HMR&C, you basically have 2 options available to you - an umbrella company or your own limited company. However, if your contract is inside IR35, you will receive payment via PAYE regardless of which option you take.

If you are paid via PAYE you will be liable for income tax and national insurance contributions. Your earnings up to £34,800, less your tax free allowance, will be taxed at 20%; everything above this will be taxed at 40%. National insurance rates are 11% for employee's and 12.8% for employer's on earnings above £105 per week.

So, assuming you are a contractor earning, say, £300 per day how on earth do you take home 85 or 90% of your earnings??? Good question. The answer is that you can't without offsetting the vast majority of your tax liability. There are several ways of doing this:

You can put everything over minimum wage into a pension scheme - this option will leave you next to nothing to live on for the next 20 or so years but you should be reasonably well off after that.

You can claim expenses. To use our example of earnings of £300 - to net 85% of your earnings you would need to claim over £800 in expenses each and every week. Whilst this is possible it is unlikely as you would be working for £700 gross a week rather than £1500 gross as your outgoings would be over £800. Of course you would get tax relief on the expenses but you would still have spent that money in the first place.

So, schemes that promise 80-90% take home can actually offer that but only if your expenses are at the sort of level shown above. If your gross earnings are £300 per week and you work 25 miles from home and don't want to invest in a pension you will not net 80-90% - if you do please expect a visit from one of the lovely chaps at the HMR&C sometime soon.

HTH

You could always lie about your mileage. Say for example, you stay away from home four nights a week as your client is 180 miles away. You pay £25 a night for a B&B. Don't claim for the B&B, claim for the 360 miles per day commute...

Oh yes!

[QwertyBerty]

You could always lie about your mileage. Say for example, you stay away from home four nights a week as your client is 180 miles away. You pay £25 a night for a B&B. Don't claim for the B&B, claim for the 360 miles per day commute...

May Hector not request to see your petrol receipts?

QB.

[Churchill]

May Hector not request to see your petrol receipts?

QB.

Nope.

You're claiming mileage, not for petrol.

[QwertyBerty]

Nope.

You're claiming mileage, not for petrol.

TBH I'm thinking more along the lines of a ltdco in the event one's expenses is queried. I would have thought having petrol receipts would at least support the mileage claim. E.g. some work from home and are no doubt tempted to claim the mileage anyway.

QB.

[Churchill]

TBH I'm thinking more along the lines of a ltdco in the event one's expenses is queried. I would have thought having petrol receipts would at least support the mileage claim. E.g. some work from home and are no doubt tempted to claim the mileage anyway.

QB.

Ah, I wasn't. Umbrella companies don't ask for petrol receipts.
(Note. Not the ones I used to work through.)