Umbrella used two months tax allowance??

**Craig@Clarity** · 31 May 2012, 07:34

You're not one of the special ones who get to use the additional tax rate of 50% on earnings over £150k are you?

**BolshieBastard** · 31 May 2012, 07:38

Originally posted by jonnyguitar View Post

Hi there. I'd be grateful if anyone could offer me any advice.

I've been contracting with the same Umbrella company for the last 12 months and they've generally been fine. But this month I was massively underpaid (about 50% what they invoice to the agency was for, before VAT).

They say it's because last month I was paid I "used" two months tax allowance, coupled with the fact the agency paid the umbrella company "sooner than was expected".

They assure me I won't be out of pocket overall but I can't help think I am, especially as I am not working for half of June due to a holiday.

Can anyone offer me any advise? I'm really confused! I've asked the umbrella company to give me a full breakdown but it still doesn't make sense tbh.

Any help would be appreciated.

Jonny

Yes, in all seriousness, stop using a brolly and letting them have control of your money.

This is one of the reasons I wont touch a brolly, you have virtually no say in what happens to the money plus, they can go tits up leaving you out of pocket.

**jonnyguitar** · 31 May 2012, 07:40

Originally posted by BolshieBastard View Post

Yes, in all seriousness, stop using a brolly and letting them have control of your money.

This is one of the reasons I wont touch a brolly, you have virtually no say in what happens to the money plus, they can go tits up leaving you out of pocket.

I agree, but I don't know where to start and I worry I'll get a large tax bill if I do it wrong. Can you suggest any cheap accountants in the London area?

**BolshieBastard** · 31 May 2012, 07:48

Originally posted by jonnyguitar View Post

I agree, but I don't know where to start and I worry I'll get a large tax bill if I do it wrong. Can you suggest any cheap accountants in the London area?

Sorry, no. I live 'Oop norf.'

What I will say is get a 'cheap' accountant, get cheap (poor) advice and service.

But, that doesnt mean a good accountant will cost the earth. I pay about £950 plus VAT for a full accountancy service ie payroll, accounts and unlimited advice.

**LisaContractorUmbrella** · 31 May 2012, 07:58

I don't think you have any need to worry Johnny. It sounds as though your payment has been rolled back and this is not uncommon. Most umbrella companies will pay you when they receive funds from the agency; this should be on a regular basis e.g. once a month or once a week. However, sometimes, for any number of reasons, a payment is made out of sync so the umbrella company may receive 2 in a month. In this instance, rather than holding on to the payment, it will be processed via the umbrella company's payroll system but your original payment that was made to you will have to be rolled-back or reversed if you prefer.

Anyone who is paid via PAYE will only receive one tax free allowance in any payroll period i.e. one week or one month, this is because PAYE works on a cumulative basis and your annual tax free allowance, which is in accordance with your tax code, will be divided equally across the financial year. Your tax free allowance does exactly what it says - it determines how much money you can receive each year tax free; this year the standard code is 810L which means you can earn £8109 this year before tax is payable.

To explain what I think has happened here:

1st Payment £1000 tax free allowance £156 taxable pay £844
2nd payment £1000 tax free allowance £0 taxable pay £1000

Therefore when your first payment is reversed and the two amounts added together, your take home pay will be less on the second occasion as you will be paying tax on a greater amount of money.

I hope that this makes sense

BB were you attacked by an umbrella by a child???????

**BolshieBastard** · 31 May 2012, 08:06

Originally posted by LisaContractorUmbrella View Post

I don't think you have any need to worry Johnny. It sounds as though your payment has been rolled back and this is not uncommon. Most umbrella companies will pay you when they receive funds from the agency; this should be on a regular basis e.g. once a month or once a week. However, sometimes, for any number of reasons, a payment is made out of sync so the umbrella company may receive 2 in a month. In this instance, rather than holding on to the payment, it will be processed via the umbrella company's payroll system but your original payment that was made to you will have to be rolled-back or reversed if you prefer.

Anyone who is paid via PAYE will only receive one tax free allowance in any payroll period i.e. one week or one month, this is because PAYE works on a cumulative basis and your annual tax free allowance, which is in accordance with your tax code, will be divided equally across the financial year. Your tax free allowance does exactly what it says - it determines how much money you can receive each year tax free; this year the standard code is 810L which means you can earn £8109 this year before tax is payable.

To explain what I think has happened here:

1st Payment £1000 tax free allowance £156 taxable pay £844
2nd payment £1000 tax free allowance £0 taxable pay £1000

Therefore when your first payment is reversed and the two amounts added together, your take home pay will be less on the second occasion as you will be paying tax on a greater amount of money.

I hope that this makes sense

BB were you attacked by an umbrella by a child???????

LOL

I just prefer being in charge of my money (or rather my co's money) rather than leave it to someone else!

**LisaContractorUmbrella** · 31 May 2012, 08:10

Originally posted by BolshieBastard View Post

LOL

I just prefer being in charge of my money (or rather my co's money) rather than leave it to someone else!

No s**t Sherlock

**alluvial** · 31 May 2012, 09:50

Originally posted by LisaContractorUmbrella View Post

I don't think you have any need to worry Johnny. It sounds as though your payment has been rolled back and this is not uncommon. Most umbrella companies will pay you when they receive funds from the agency; this should be on a regular basis e.g. once a month or once a week. However, sometimes, for any number of reasons, a payment is made out of sync so the umbrella company may receive 2 in a month. In this instance, rather than holding on to the payment, it will be processed via the umbrella company's payroll system but your original payment that was made to you will have to be rolled-back or reversed if you prefer.

Anyone who is paid via PAYE will only receive one tax free allowance in any payroll period i.e. one week or one month, this is because PAYE works on a cumulative basis and your annual tax free allowance, which is in accordance with your tax code, will be divided equally across the financial year. Your tax free allowance does exactly what it says - it determines how much money you can receive each year tax free; this year the standard code is 810L which means you can earn £8109 this year before tax is payable.

To explain what I think has happened here:

1st Payment £1000 tax free allowance £156 taxable pay £844
2nd payment £1000 tax free allowance £0 taxable pay £1000

Therefore when your first payment is reversed and the two amounts added together, your take home pay will be less on the second occasion as you will be paying tax on a greater amount of money.

I hope that this makes sense

BB were you attacked by an umbrella by a child???????

WLCUS

I'm umbrella (for my own reasons) and this has happened to me a few times in the past. If you manage to get two payments in a tax period then you will end up paying more tax. However, it does even out and I sometimes ended up getting a tax refund in the next tax period.

Umbrella used two months tax allowance??