Help to understand just about everything wages /tax/expenses /NI umberela company

[LisaContractorUmbrella]

when I received his payslip last week I phoned the agency sent them a copy of the payslip told them it wasn't good enough just to put total hours worked and it did not state his hourly rate and what hours were paid at normal rate time and a half and double time this has now been changed its was just the non-taxable lodge I couldn't understand because it isn't part of his wages I expected to treated as a separate

ive got a better understanding of it now thanks to this site thank you both for replying

Has the umbrella confirmed that the lodge payment is non-taxable??

[Hallowitch]

In all seriousness - if your umbrella company can't give you an explanation of your payslip that you can fully understand, you need a new umbrella company.

when I received his payslip last week I phoned the agency sent them a copy of the payslip told them it wasn't good enough just to put total hours worked and it did not state his hourly rate and what hours were paid at normal rate time and a half and double time this has now been changed its was just the non-taxable lodge I couldn't understand because it isn't part of his wages I expected to treated as a separate

ive got a better understanding of it now thanks to this site thank you both for replying

[LisaContractorUmbrella]

this is where my confusion may come in I think I assumed that the main contractor would be claiming for this through his tax allowance

No, it doesn't work like that I'm afraid

[LisaContractorUmbrella]

we have only been with this umbrella company 2 weeks and to be honest I couldn't understand his wage slip (didn't understand the last one properly but thought I could see what was what now I know I didn't )

With the last umbrella I only claimed for evening meals and Mileage and provided receipts I didn't claim the £10 a day substance because their is no canteen on site that you cant buy meals from but their is cooking facility's for the men to use so he buys bread milk tea bags pies ect for day time from the supermarket

I didn't claim lodge because I thought you couldn't claim tax back from an allowance that was not subject to tax and no one told me different or ask for receipts for lodge

Many thanks for your help

In all seriousness - if your umbrella company can't give you an explanation of your payslip that you can fully understand, you need a new umbrella company.

[Hallowitch]

As TheFaqqer says - the employer probably had an HMRC dispensation to allow for this in which case the amount would have been non-taxable; if the umbrella company does not have a corresponding dispensation or the amount being paid by the agency is not to cover actual incurred costs then it will be taxable

this is where my confusion may come in I think I assumed that the main contractor would be claiming for this through his tax allowance

[Hallowitch]

As a guess...

The previous employer had a scale rate agreement which meant that rather than paying the exact money to cover the accommodation expense, they can pay a lump sum for each day. When I was a permie, we could claim £40 for accommodation and £25 for food as a per diem and pay no tax on it - great when working on a project where I could live in a shoebox in't middle o' road.

spot on with your Guess work and I believe he has lived in few dumps over the years

However, the umbrella doesn't have such an arrangement with HMRC, so they either need to pay that money out as salary or pay out the exact expense incurred.

Is your husband putting his expenses through for the amount that he is actually spending? If so, then the only additional tax / NI that will be due would be based on the difference between the lump sum being paid by the client and the amount actually incurred by the contractor. If it's the same, then there is nothing extra; if there is a difference then either the umbrella pockets the difference (not what you want!) or pays it out as salary (and you pay the extra tax).

we have only been with this umbrella company 2 weeks and to be honest I couldn't understand his wage slip (didn't understand the last one properly but thought I could see what was what now I know I didn't )

With the last umbrella I only claimed for evening meals and Mileage and provided receipts I didn't claim the £10 a day substance because their is no canteen on site that you cant buy meals from but their is cooking facility's for the men to use so he buys bread milk tea bags pies ect for day time from the supermarket

I didn't claim lodge because I thought you couldn't claim tax back from an allowance that was not subject to tax and no one told me different or ask for receipts for lodge

Many thanks for your help

[LisaContractorUmbrella]

he was employed direct by the construction company

this is the first time he has worked away and been paid by umbrella company

when the agency asked him to (first time he has worked for this agency ) work away there was no lodge included the agency went back to the client and they agreed to give him £x per night to cover accommodation this is paid as a non taxable expense by the client to the agency then passed to the umbrella company

Thank you for time and help

As TheFaqqer says - the employer probably had an HMRC dispensation to allow for this in which case the amount would have been non-taxable; if the umbrella company does not have a corresponding dispensation or the amount being paid by the agency is not to cover actual incurred costs then it will be taxable

[TheFaQQer]

As a guess...

The previous employer had a scale rate agreement which meant that rather than paying the exact money to cover the accommodation expense, they can pay a lump sum for each day. When I was a permie, we could claim £40 for accommodation and £25 for food as a per diem and pay no tax on it - great when working on a project where I could live in a shoebox in't middle o' road.

However, the umbrella doesn't have such an arrangement with HMRC, so they either need to pay that money out as salary or pay out the exact expense incurred.

Is your husband putting his expenses through for the amount that he is actually spending? If so, then the only additional tax / NI that will be due would be based on the difference between the lump sum being paid by the client and the amount actually incurred by the contractor. If it's the same, then there is nothing extra; if there is a difference then either the umbrella pockets the difference (not what you want!) or pays it out as salary (and you pay the extra tax).

[Hallowitch]

Was your husband employed by the construction company or was he working through the CIS scheme and registered as a sole trader? To answer your question - the tax treatment of the £200 will depend on the dispensation granted to the umbrella company by HMRC.

he was employed direct by the construction company

this is the first time he has worked away and been paid by umbrella company

when the agency asked him to (first time he has worked for this agency ) work away there was no lodge included the agency went back to the client and they agreed to give him £x per night to cover accommodation this is paid as a non taxable expense by the client to the agency then passed to the umbrella company

Thank you for time and help

[LisaContractorUmbrella]

thanks Lisa I will at some point be speaking the umbrella company but I just wanted to get my head round how it all works first

I simply don't understand how when he was employed by ABC construction if a job was away from home the lodge money paid to him was (on his wage slip) lodge non taxable £xxx and no tax and NI was paid on this lodge money (because it wasn't wages ) but with the umbrella company it is charged on their NI his NI and Tax

Thanks

Was your husband employed by the construction company or was he working through the CIS scheme and registered as a sole trader? To answer your question - the tax treatment of the £200 will depend on the dispensation granted to the umbrella company by HMRC.

[Hallowitch]

You're welcome Although I should say that your husband's umbrella company should really be able to answer your questions

If an amount is added to the invoice each week regardless of any costs incurred then it should be considered taxable pay; only actual costs which have been incurred wholly and exclusively as a result of the contract can be claimed for tax relief as expenses.

thanks Lisa I will at some point be speaking the umbrella company but I just wanted to get my head round how it all works first

I simply don't understand how when he was employed by ABC construction if a job was away from home the lodge money paid to him was (on his wage slip) lodge non taxable £xxx and no tax and NI was paid on this lodge money (because it wasn't wages ) but with the umbrella company it is charged on their NI his NI and Tax




Thanks

[LisaContractorUmbrella]

You're welcome Although I should say that your husband's umbrella company should really be able to answer your questions

If an amount is added to the invoice each week regardless of any costs incurred then it should be considered taxable pay; only actual costs which have been incurred wholly and exclusively as a result of the contract can be claimed for tax relief as expenses.

[Hallowitch]

Lisa thanks for the reply very much appreciated

when my hubby works away from home he receives a non taxable amount of lodge money per night to pay for his accommodation example

wages for hours worked £1,300 lodge non-taxable £200 total invoiced to the umbrella company £1,500

should they deduct their NI from the full amount paid or should the lodge money (£200) be deducted first before their NI contribution is calculated

I also don't understand why if his wages are less this week than last week the NI paid to the umbrella company is more

Thanks

[LisaContractorUmbrella]

An umbrella company employs you under a Contract of Employment; in turn it has a business to business contract with the agency/client. They will raise an invoice at the contract rate multiplied by the number of hours/days you have worked and this invoice is then payable by the agency/client to the umbrella company. An umbrella company has, as with any other employer, a legal obligation to pay Employer's National Insurance Contributions and you, as their employee, are subject to Income Tax and Employee's National Insurance Contributions. So, when the umbrella company receives payment of its invoice from the agency/client, they will retain their margin (usually £25-£30 per week), they will put aside the ERr's NIC's contribution (which is payable to HMRC once a month on 19th) and they will then pay your salary. Again the Income Tax and EE's NIC's will be put aside to be paid to HMRC on the 19th.

Can you explain what you mean by 'lodge money'?

[Hallowitch]

Hello Everyone

I hope this post makes sense so please bear with me


when using an umbrella company I understand you pay them NI and a Margin from your wages

is this is taken first from your top line before your own tax and NI is deducted ? (its my understanding that it is )

If an amount is sent to the umbrella company as non taxable (Lodge money) should the umbrella include this amount in their NI calculations ?