Reply to: New to all this, need advice.

[ratewhore]

I wouldn't pay £30 to stay at your girlfriends. It's a right tip...

[boredsenseless]

£30 for staying at your girlfriends.

Sorry but I think this is taking the p155, unless you can prove that you have never been allowed to stay there before without being charged for the privilege.

Staying with friends and family is an acceptable expense if they actually charge you for, issue a receipt and then pay tax on it.

For any item above about 10 quid the simple test as to whether or not it is remotely allowable is this - is the person getting the money asking for it in cash?

If they either aren't getting the cash, or don't want it traceable I wouldn't even think about touching it.

Even if you passed the above simple test there are countless other rules as to what you can and can't claim.

The £30 dispensation is there for one reason only. THE HMRC knows you can't even get a broom cupboard in a flea pit for that nowadays so if you claim it they know there is a decent chance you haven't spent it, hence easy picking for an investigation, and as it is so cheap, if you did actually spend it, the chances are the person you gave it to didn't disclose it so they can get them to.


Now before you shout about the 'rent-a-room' scheme yes this is fine and it is tax free up to whatever limit, but only if you declare it, if you don't mention it on your tax return its classed as income and taxable.

[s2budd]

New to all this, need advice.

A word of advice. Although on the face of it your contract hourly rate is higher than your permy hourly rate there are extra costs.
I generally work on the rule that is earning £35K per year in a permy job then you should be earning £35 per hour if working from home or £45 if working away from home. Anything less and you should be permy, anything more and keep it in the bank for when you are not working.

[Mordac]

Analyst - you didn't bother to read my first post did you? I even named your brolly as one to avoid.

Just to spell it out for you, one more time, read this slowly.

Expenses are only "unreceipted" at the point of claiming from the brolly - basically because they are too lazy to do the processing for you - you still need receipts. It's not "free money". It's a scam. And you are the one who will end up falling for it. In the form of a large tax bill.

OK? Anything you still don't understand?

[Lucifer Box]

Analyst, the rule is very simple, no matter what your umbrella tells you: you can only claim expenses that you have legitimately incurred. You (not the umbrella) have to be able to prove the money was legitimately spent by producing receipts or other proof of purchase (e.g. rail tickets, credit card statements, etc.) when asked to by HMCR (and at the levels your umbrella is telling you to claim, they are almost certain to ask).

[malvolio]

Errm.... Think about it - why would anybody pay you expenses for things you are not spending out?

Well actually it's because they con you into thinking they are giving you free money, you sign up and they get their fees - which is why they are in business. When the taxman checks up on it (and he will), it's you that gets the tax evasion prosecution, not the umbrella. So do not take their advice, speak to a proper accountant, not someone with a vested interest.

You're not talking about what's allowed in law, you're talking about what the umbrella is letting you claim, which is not the same thing and in this case is IMHO illegal. Bin these guys and go with an honest one.

[TheAnalyst]

Thanks guys for the advice but something does not add up right here, I'll explain ....

The umbrella company (Oxygen360) woman called me and explained loads of stuff to me, this included

Because im staying at my girlfriends for the duration of the contract im entitled to £30 tax free earnings per working day for accomodation, £26 for food (as with travel I will be away from the flat for over 10 hours a day), £5 for travel and £5 for random other stuff, the only thing I would need to show receipts for would be the travel.

She worked out that working a 38 hour week I would see nearly an 85% return after deductions after taking these expenses into account which equates to about £440 a week after they take their £30 a week fee, to me this is GREAT money!!!

But I'm getting the feeling im being taken for a fool by someone?

[Lucifer Box]

Burger flippers and shelf stackers. That's what we need.

[threaded]

Don't bother with IT, go back to college and study law or accountancy. The IT age in the UK is over.

[Lucifer Box]

in particular Employers National Insurance of almost 20%

I wouldn't recommend you follow absoft's advice and pay employers' NI at almost 20%. If I were you I'd stick to the required 12.8% of earnings in excess of £94/week.

[malvolio]

Now contractors can no longer pay themselves a low salary and high dividends and claim loads of expenses, its hardly worth contracting - imho

Really - well I never knew that before... Been talking to Miler's accountant, perhaps?

For absolutely the last time, an umbrella can't return any more money that a discrete Limited Company can, since both have to stick to the same laws and taxation rules. In fact the umbrella will return slightly less, since you have to pay them to do things for you. The big thing an umbrella does do is take away all the uncertainty about IR35 status (becuase it won't apply, you're an employee of the umbrella) and all the year end compliance stuff. And, of course, for people just starting out, it's a good way to get going without risk until you learn how it all really works. That is their ONLY F***ING benefit.

And if you want to compare like for like, multiply your hourly rate by 10 and you will get the roughly equivalent gross annual wage for a permie - in the OP's case, around £14,250. Gross deductions will be the same, near as damnit, so he is a bit ahead of the previous, premie job - but not as much as he might imagine.

[absoft]

While the contract rate may look good at first sight, there are a lot of deductions; in particular Employers National Insurance of almost 20%, then you have to take off your own National Insurance and tax ! Also you won't get paid for holidays, bank holidays, or if you are sick. Now contractors can no longer pay themselves a low salary and high dividends and claim loads of expenses, its hardly worth contracting - imho.
For a good umbrella company, go with ParasolIT; I know people who have used them and are quite satisfied. They also include professional indemnity insurance in their fee which the umbrella I'm with doesn't - so I am going to change to them myself soon.

[Harrysp]

Same old flamin questions, cant we just post up a sticky pointing to all the FAQ's?

FFS

[~Craig~]

Have a look on http://www.parasolitcalculator.co.uk/

or NoLongerLimited it will work it all out for you.

Good Luck with the new job

[Mordac]

Depends who the Umbrella is. If it's 360 or Prosperity4, I personally wouldn't. They (allegedly) use all sorts of "unreceipted" expenses scams to make it appear you are better off going with them. When Hector comes a-knocking (which he will), you'll be buggered.
Some of the less reputable brollies offer back-handers to some of the less reputable agencies to send them their "green" contractors, just so you're aware.
Parasol are very good. OrangeGenie used to be but took their eyes off the ball.
Your contract is very likely to be inside IR35, based on the info given.
To gat an idea of your take-home whether inside or outside IR35, visit IR35 Calculator