Reply to: The Autumn Statement 2024

[BolshieBastard]

Same old £3000 a year and live 7 years if you give them more than that - I believe.

Gifting doesnt have that restriction. Just has to be out of excess income, not capital, not affect your standard of living and have some form of regularity.

https://www.telegraph.co.uk/money/ta...ance-tax-bill/

[eek]

Is the finer detail in the Treasury's Blue Book been released yet? Im hoping 'gifting' out of excess income hasnt been touched so I can continue drip feeding the kids their inheritance exempt for IHT.

Same old £3000 a year and live 7 years if you give them more than that - I believe.

[BolshieBastard]

Is the finer detail in the Treasury's Blue Book been released yet? Im hoping 'gifting' out of excess income hasnt been touched so I can continue drip feeding the kids their inheritance exempt for IHT.

[vetran]

You're not mistaken, some umbrellas are pretty much forced to extend credit to agencies and have to use expensive credit insurance or factoring. Unfortunately there is an increasing demand from agencies for umbrellas to offer even more extended credit terms.

Well look forward to 5-10% taken off the top to finance this.

https://gocardless.com/guides/posts/...ers%20directly.

[eek]

Ah ok thanks; I'd mistakenly presumed the umbrella paid the workers before getting the payment from the agency, in much the same manner an agency pays a ltd before getting payment from client.

paying a worker before the umbrella gets paid is one of the 2 versions of a kickback that may get you on to the agency's PSL the other is simply paying the agency £x per payslip per worker referred.

Of those 2 methods 1 is painful for the umbrella but doesn't create systematic risk for the umbrella, the other creates systematic risk...

[Chris Bryce]

Ah ok thanks; I'd mistakenly presumed the umbrella paid the workers before getting the payment from the agency, in much the same manner an agency pays a ltd before getting payment from client.

You're not mistaken, some umbrellas are pretty much forced to extend credit to agencies and have to use expensive credit insurance or factoring. Unfortunately there is an increasing demand from agencies for umbrellas to offer even more extended credit terms.

[gables]

I really wouldn't be using an umbrella that is lending an agency money by paying their worker before they receive the money from an agency.

It only takes one agency (not even yours) to not pay the umbrella and the umbrella will have serious problems. We saw that exact story destroy an umbrella overnight last year ironically on the day of the ContractorUK awards.

Ah ok thanks; I'd mistakenly presumed the umbrella paid the workers before getting the payment from the agency, in much the same manner an agency pays a ltd before getting payment from client.

[eek]

It's more than just paperwork though isn't it? By that I mean contractors get paid way before the umbrella gets the money for the timesheet\invoice. I appreciate this was much the same with an agency and Ltd but that seems quite a bit simpler i.e. my Ltd invoices the agency, they pay me before the client pays them and that was it.

I really wouldn't be using an umbrella that is lending an agency money by paying their worker before they receive the money from an agency.

It only takes one agency (not even yours) to not pay the umbrella and the umbrella will have serious problems. We saw that exact story destroy an umbrella overnight last year ironically on the day of the ContractorUK awards.

[Chris Bryce]

Kind of begs the question what does the umbrella company actually do? Already just a bunch of leeches that charge for not very much, and now it sounds like they will essentially be doing nothing at all. I suppose they could always put their fees down to £0.

I'm biased, of course, but I'm not sure that people fully appreciate the work a good umbrella does or how much their wafer-thin margins have to cover. See the chart based on a £1000 assignment rate.

[dsc]

it means you could pay your wife a decent salary but if the company only employs you and no-one else you can't claim the allowance - that is where my £600 came from...

Apart from this, what other changes are there for ltds? the wrap up relief changes from April 2025 / 2026, but I can't see much else.

[gables]

Kind of begs the question what does the umbrella company actually do? Already just a bunch of leeches that charge for not very much, and now it sounds like they will essentially be doing nothing at all. I suppose they could always put their fees down to £0.

It's more than just paperwork though isn't it? By that I mean contractors get paid way before the umbrella gets the money for the timesheet\invoice. I appreciate this was much the same with an agency and Ltd but that seems quite a bit simpler i.e. my Ltd invoices the agency, they pay me before the client pays them and that was it.

[GJABS]

This will provide some justification when an agency says "You have to use one of the umbrellas from our shortlist" (rather than letting you choose your own).

Which will probably be restrictive, like refusing to allow you to salary sacrifice into your sipp pension.

[hobnob]

This will provide some justification when an agency says "You have to use one of the umbrellas from our shortlist" (rather than letting you choose your own).

[eek]

In practice, it means that the agency (or end client) will be responsible for PAYE taxes, but won't be required to operate payroll. As far as I can see, it's akin to an agency engaging a sole trader, which they generally won't do because they are liable for any shortfall in taxes paid. In terms of how clients/agencies react to ensure compliance, I don't know. They may be satisfied with their compliant umbrella operating payroll on their behalf. Or they may decide to operate agency payroll. If the latter, they could also decide to retain the umbrella to pay the worker, deducting the taxes themselves, but remitting the net payment to the umbrella for onward payment to the worker. I expect lucyclarityumbrella can shed some light about the likely impacts, but I expect the impacts are not dramatic for compliant umbrellas.

Agencies still won't want to run payroll - the question becomes 1 of how can an agency be 100% sure the umbrellas they allow are 100% compliant.

[jamesbrown]

Kind of begs the question what does the umbrella company actually do? Already just a bunch of leeches that charge for not very much, and now it sounds like they will essentially be doing nothing at all. I suppose they could always put their fees down to £0.

In practice, it means that the agency (or end client) will be responsible for PAYE taxes, but won't be required to operate payroll. As far as I can see, it's akin to an agency engaging a sole trader, which they generally won't do because they are liable for any shortfall in taxes paid. In terms of how clients/agencies react to ensure compliance, I don't know. They may be satisfied with their compliant umbrella operating payroll on their behalf. Or they may decide to operate agency payroll. If the latter, they could also decide to retain the umbrella to pay the worker, deducting the taxes themselves, but remitting the net payment to the umbrella for onward payment to the worker. I expect lucyclarityumbrella can shed some light about the likely impacts, but I expect the impacts are not dramatic for compliant umbrellas.