Being offered renewal under umbrella, unsure about where to go from here

[ladymuck]

Which four umbrellas is the client proposing? Is there a reason why they won't let you choose your own? Make sure you do your research into the options.

[cojak]

I mainly claim subsidence and computer cost expenses.


And how do pension contributions work through an umbrella? Apparently no corporation tax saving anymore as with a limited company and employer's pension contributions...

That's the only upside with (some) umbrellas. You can shove a lot of you pretax income into a pension.

Others will be more accurate about this than me though.

[Ariosa]

Which four umbrellas is the client proposing? Is there a reason why they won't let you choose your own? Make sure you do your research into the options.

All four are legit and they are the ones the client "audited"...

[eek]

All four are legit and they are the ones the client "audited"...

Which opens a different can of worms - what auditing did they actually do.

Remember Professional Passport and FCSA both "audit" the umbrella's they list and I have valid reasons to say neither list is trustworthy.

[Paralytic]

That's the only upside with (some) umbrellas. You can shove a lot of you pretax income into a pension.

This. If you have previous years £40K pension allowances to carry forward, you can effectively "retain" 90%+ of your day rate by getting paid the minimum wage in cash and putting the rest towards your pension. How long you can do this for depends on your carry forward allowance and your day rate.

After you've done that, you can still easily retain 60-80+% of your day rate, in order to use up your annual £40K pension allowance, again, depending on your actual day rate.

This obviously means you'll need other cash to live off, but if your company has a war-chest (retained profit), you can continue to pay yourself a dividend (ideally, only up to the 7.5% tax threshold).

[eek]

That's the only upside with (some) umbrellas. You can shove a lot of you pretax income into a pension.

Others will be more accurate about this than me though.

With an umbrella you can pay £40000 into your pension tax free via salary sacrifice from the money the agency pays the umbrella.

The umbrella does however need to pay you the living wage - so you can't throw everything into your pension.

[eek]

This. If you have previous years £40K pension allowances to carry forward, you can effectively "retain" 90%+ of your day rate by getting paid the minimum wage in cash and putting the rest towards your pension. How long you can do this for depends on your carry forward allowance and your day rate.

After you've done that, you can still easily retain 60-80+% of your day rate, in order to use up your annual £40K pension allowance, again, depending on your actual day rate.

This obviously means you'll need other cash to live off, but if your company has a war-chest (retained profit), you can continue to pay yourself a dividend (ideally, only up to the 7.5% tax threshold).

Not quite - you will always use this years pension allowance first and then the oldest with an unused allowance next.

So it's 20/21 followed by 17/18 (as I think you can go back 3 years and I'm not in the mood to double check via google).

[Paralytic]

Not quite - you will always use this years pension allowance first and then the oldest with an unused allowance next.

So it's 20/21 followed by 17/18 (as I think you can go back 3 years and I'm not in the mood to double check via google).

Yes, you must use current year's allowance first first, then any left over from previous 3 years, starting with the earliest.

Not sure what is "not quite" though - I just said that if you have previous years allowances, you can carry it forward.

[eek]

Yes, you must use current year's allowance first first, then any left over from previous 3 years, starting with the earliest.

Not sure what is "not quite" though - I just said that if you have previous years allowances, you can carry it forward.

Your second paragraph

How long you can do this for depends on your carry forward allowance and your day rate.

After you've done that, you can still easily retain 60-80+% of your day rate, in order to use up your annual £40K pension allowance, again, depending on your actual day rate.

implied that the order the pension allowances were the oldest followed by this years rather than the other way around.

[eek]

I mainly claim subsidence and computer cost expenses.

Missed this - neither will be deductible going forwards.