Reply to: How much should I expect?

[Drewster]

.... I also go via an umbrella company to reduce the hassle....

.....Even though you are paying your umbrella to get your payroll right, they rarely do. Register with Government Gateway ASAP to get your secure logon details and ALWAYS - and I mean ALWAYS do an end of year self assessment via the HMRC online service even if you feel you have no obligation to do so, and especially so if your umbrella tells you not to. HMRC have no issue with you doing so and it is simple and painless. I have been doing this since 2005 as I had the distinct feeling I was being overtaxed by Parasol. My formula above proved me right and I was able to reclaim £2400 in overpaid tax that year. I have done this every end of year since and I reclaim on average around £2500 per year, it takes about 4 weeks for the money to be paid, and it goes straight into your nominated bank account.

If you do reclaim any overpaid tax (and chances are that you will) you may get a letter from HMRC saying that you do not need to submit a self assessment for the following year. Ignore this notice and do it anyway.

Am I alone in finding this advice strange....... Use an Umbrella because they are less hassle..... but spend a fair bit of hassle every year because the (chosen) Umbrella "gets it wrong".......

Why (Oh why oh why) would you consciously pay (anyone) to knowingly get it wrong and then (at your cost) spend time/effort to sort it out......

I would certainly agree that "you" should keep an eye on whats going on and (do your best to) understand pros/cons etc (rather than blindly trusting "anyone") but to knowingly PAY for someone to get it wrong!!!
ARGGGHHHHHHHH!!!!! Words fail me!!!

[Svalbaard]

Hi folks,

My first post here on the forum, and new to contracting, its my first one. I'm using an Umbrella company (Giant). My wages are paid in arrears, and have not yet been paid yet, just started the contract 3 weeks ago. I'm just wondering how much I should expect?

The daily rate is £300, and I also include a £30 travel card on my expenses. I've stuck to my usual homemade ham sandwiches for lunch, but should I be buying lunches and adding them on to expenses??

I have a feeling I'm going to be disappointed when the first weekly payment is given :S

Any ideas roughly what I should receive?

Thanks for any insights
Dav

Hi Dav, welcome the forums and well done for making the jump into a better more lucrative world. I also go via an umbrella company to reduce the hassle, and the calculation I use when working out average monthly takehome is:

((working days in month * daily rate) * 0.63)

If my takehome varies from this by a few percent then I know there has been a mistake. After contracting for a while you'll get a feel for your %'s and will be able to make your own estimates.

Two pieces of advice for you if you don't mind:

1. There are better umbrella companies that Giant. I have been with CU for about a year now and IMHO they are the best out there in regards of service. That's my opinion BTW having being contracting for a long time now.

2. Even though you are paying your umbrella to get your payroll right, they rarely do. Register with Government Gateway ASAP to get your secure logon details and ALWAYS - and I mean ALWAYS do an end of year self assessment via the HMRC online service even if you feel you have no obligation to do so, and especially so if your umbrella tells you not to. HMRC have no issue with you doing so and it is simple and painless. I have been doing this since 2005 as I had the distinct feeling I was being overtaxed by Parasol. My formula above proved me right and I was able to reclaim £2400 in overpaid tax that year. I have done this every end of year since and I reclaim on average around £2500 per year, it takes about 4 weeks for the money to be paid, and it goes straight into your nominated bank account.

If you do reclaim any overpaid tax (and chances are that you will) you may get a letter from HMRC saying that you do not need to submit a self assessment for the following year. Ignore this notice and do it anyway.

Good luck.

[Ardesco]

as the expenses receipts you are giving to giant or any Umbrella co they send off to the HMRC and get the tax rebate - so your effectively putting money into their hands for things you spent money during the year on eek

They can't keep your tax rebates, that would be fraud and would put them in a load of tulip.

Get a clue.

[Torran]

In regards to your giant expenses. You should have agreed a certain amount 'a day' it used to be £20 per day (dunno now though). Make sure you run up £20 per day allowed expense this will help your take home and (keep your expenses filed, you will need them at month end to your umbrella co).

possibly the worst ever advice I have ever read on here

[LisaContractorUmbrella]

Hi everyone,

Thanks a lot for all your posts, its been really helpful and things are slowly becoming a little clearer now. Just a bit naive with all this stuff, so want to make sure I'm not being taken for a ride or anything.

My understanding is that, the rate is fixed, the amount of tax I have to pay based on that rate would be the same regardless of the umbrella company, so thats ok. The amount Giant charged sounded reasonable for there 'fee' so I was happy with that. However, I remember when I got my example weekly 'calculation' done by Giant, there was a lot of talk of daily expenses and things like that, and I think that may have been added on to the calculation. Thing is, I am unlikely to spend £20 on food in one day (it was roughly this amount I'm sure?), I probably spend about £3 on food throughout the day, and I'm not sure I can really put in a receipt for bread, butter and ham?! Just wondering if all these extra expenses in the fee helped bump up the example calculation a bit much?

Are these expenses, if we have a receipt, fully refundable? Or just the VAT part of them?

Other than the Agencies fee, the tax you pay, and the expenses receipts, I cant really see where any of the money could slip away to?

Anyway, I get my first payment on Monday if all goes well, I'm paid monthly ( I thought it was weekly, my mistake). So, all will become clear soon.

Well, thanks again, I think this forum is going to be very useful for me ;]

Dav

If expenses have been assumed in the calculation that were given they will have artificially inflated the net figure and your actual take home will be less; if expenses of £20 per day have been allowed for and you haven't incurred them, it will be quite a lot less.

Unless the expenses you claim are chargeable to your agency/client they will not be reimbursed in full, they will be processed as a tax benefit e.g if you earn £500 per week and claim £75 per week expenses, your tax will be calculated on £425 per week.

With regard to your lunches - if you are making sandwiches and taking them with you you cannot claim for the cost of the ingredients as there will be no additional cost to you than if you were eating lunch at home. Whether or not you can claim lunch at all will depend on a number of factors but you certainly cannot claim £20 per day if you are only spending £3.

[dav77]

Hi everyone,

Thanks a lot for all your posts, its been really helpful and things are slowly becoming a little clearer now. Just a bit naive with all this stuff, so want to make sure I'm not being taken for a ride or anything.

My understanding is that, the rate is fixed, the amount of tax I have to pay based on that rate would be the same regardless of the umbrella company, so thats ok. The amount Giant charged sounded reasonable for there 'fee' so I was happy with that. However, I remember when I got my example weekly 'calculation' done by Giant, there was a lot of talk of daily expenses and things like that, and I think that may have been added on to the calculation. Thing is, I am unlikely to spend £20 on food in one day (it was roughly this amount I'm sure?), I probably spend about £3 on food throughout the day, and I'm not sure I can really put in a receipt for bread, butter and ham?! Just wondering if all these extra expenses in the fee helped bump up the example calculation a bit much?

Are these expenses, if we have a receipt, fully refundable? Or just the VAT part of them?

Other than the Agencies fee, the tax you pay, and the expenses receipts, I cant really see where any of the money could slip away to?

Anyway, I get my first payment on Monday if all goes well, I'm paid monthly ( I thought it was weekly, my mistake). So, all will become clear soon.

Well, thanks again, I think this forum is going to be very useful for me ;]

Dav

[LisaContractorUmbrella]

"In regards to your giant expenses. You should have agreed a certain amount 'a day' it used to be £20 per day (dunno now though). Make sure you run up £20 per day allowed expense this will help your take home and (keep your expenses filed, you will need them at month end to your umbrella co). "

You cannot 'agree' amount of expenses with an umbrella company; you will either incur expenses or you will not. The umbrella company will probably have a dispensation which has limits for certain types of expenses but this does not mean that contractors are entitled to claim that amount every day. It only means that they will not have to file a P11D for expense claims below this amount. I would urge any new contractors not to put through expense claims that they are not able to support with receipts as these would be disallowed by HMR&C.

[strawberrysmoothie]

Along with everyone else here. Congrats on the contract. Well done

It is a wise decision to go with an umbrella company still, I will warn you about giant ( I used them in my 1st contract).

If you're using 'giant strong box', did they provide you with a specific day that funds should be available into your account? make sure you chase (your agency payroll dept) prior to that date to make sure your payments transferred to the Umbrella co. and the date it happend.

The reason I am saying this is that Giant have a 'habit' of not paying contractors on time and blaming the agency (shock I know, agency that pays on time!). This happened to me a about 4 times in a six month contract . Makes sure any correspondences (email or fax) you have to send to your giant account manager are documented because they will try to blame you for any f&^k up's they make.

In regards to your giant expenses. You should have agreed a certain amount 'a day' it used to be £20 per day (dunno now though). Make sure you run up £20 per day allowed expense this will help your take home and (keep your expenses filed, you will need them at month end to your umbrella co).

Finally if you can LEAVE giant join and another umbrella co (if you have to) or better still set up LTD company as (as the expenses receipts you are giving to giant or any Umbrella co they send off to the HMRC and get the tax rebate - so your effectively putting money into their hands for things you spent money during the year on eek)

[pmeswani]

Its a bit of a hijack to debate that here, but its probably helpful nonetheless. I would guess dav77 doesn't know any accountants or what to do to set up a company. The umbrellas appear to take away all this for small outlay each month.

To be honest, when I did the sums it probably was cheaper to go umbrella but I decided I could do more with my ltd company, I've done it before and I used to be an accountant.

I'm unsure why you are under the impression that I am hijacking the debate. I am making a comment based on the OP's post. I know the OP has decided to go down the route of umbrella and is not asking for advice in this area.

[original PM]

as mentioned, i'd ask Giant as your paying them to do the work, they should therefore explain to you what you can expect..

True however you are now an employee of giant - they have the signed contract and will be recieving your money first - now they have you they do tend to make it difficult to contact them with queries.

However as a rough guide

If you are still below the 40% tax threeshold and you have a standard tax code (563l this year?) you can expect to take home roughly 3/4 of your gross pay

If above the 40% threeshold and/or on a BR/week1 tax code expect 2/3 of your gross pay.

The more expenses you claim however the more money you will come out with.

Hope this helps and good luck!

[chef]

agreed with all of the above, not that we dont want to help but there's so many factors personal to you that im guessing you wont want to share on a public forum..

as mentioned, i'd ask Giant as your paying them to do the work, they should therefore explain to you what you can expect..

[zara_backdog]

Hi

I uesd Giant before my Ltd. They will give you a spreadsheet if you ask detailing how much you can ean on £300pd this is what I did for me prior to starting the contract. Speak to your account manager\contact.

[Torran]

for 3 weeks I would expect roughly £2800 (ish) on that rate, using those expenses + sub and using my own tax code.

[Grinder]

The one thing that does surprise me is that you are using an Umbrella whilst on £300 p/d. If your contract is for one or two months, then fair enough... but it would have been more efficient to set up your own ltd company with that type of rate.

Its a bit of a hijack to debate that here, but its probably helpful nonetheless. I would guess dav77 doesn't know any accountants or what to do to set up a company. The umbrellas appear to take away all this for small outlay each month.

To be honest, when I did the sums it probably was cheaper to go umbrella but I decided I could do more with my ltd company, I've done it before and I used to be an accountant.

[pmeswani]

Hi folks,

My first post here on the forum, and new to contracting, its my first one. I'm using an Umbrella company (Giant). My wages are paid in arrears, and have not yet been paid yet, just started the contract 3 weeks ago. I'm just wondering how much I should expect?

The daily rate is £300, and I also include a £30 travel card on my expenses. I've stuck to my usual homemade ham sandwiches for lunch, but should I be buying lunches and adding them on to expenses??

I have a feeling I'm going to be disappointed when the first weekly payment is given :S

Any ideas roughly what I should receive?

Thanks for any insights
Dav

Most of the questions have been answered. In terms of expenses... what have you agreed with Giant? (No need to answer that in this forum.... but something you may want to consider asking them how much you can claim).

There are a number of things you have to consider when working out how much you will earn on a weekly basis. Such as...

1. Are you single or married? (The tax code is mainly worked out by this).

2. Do you have any Student Loans outstanding?

3. If you are separated from your partner and have kids, are you required to pay any Child Maintenance?

4. Are you making any pension contributions from your PAYE salary?

5. What are your charges to the Umbrella company?

6. Are you claiming any other expenses other than travel?

There are so many other questions that probably needs to be asked, but the above are a starter for 6. Use the calculator that has already been posted on this thread, and hopefully you will be in the money.

The one thing that does surprise me is that you are using an Umbrella whilst on £300 p/d. If your contract is for one or two months, then fair enough... but it would have been more efficient to set up your own ltd company with that type of rate.