Originally posted by The Server Side Guy
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Previously on "Higher Rate Tax Payments Working Through Umbrella"
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Yes, thanks for the responses.
I do rather resent overpaying and then having to wait until the end of the tax year to claim a rebate.
HMRC are effectively getting an interest free loan!
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From what I understand its on monthly basis and depends on the tax code. Once your Umbrella company submits a payroll, HMRC should issue an amended tax code which should be used going forward.
if you end up leaving before you hit the higher rate bracket and don't have any other income then overpaid tax will be refunded to you.
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In my experience, it's similar to a permanent job, i.e. I get charged roughly the same amount of tax all year round, based on my estimated income for the year. It tends to go up slightly after the first couple of months, but nothing as significant as the jump from 20% to 40%. I've also had to claim a rebate in my SATR for the last 3 years, because the umbrella companies all overestimated it.
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I would have thought the brolly would have done it for you but i would ring HMRC up and tell them why you expect your earnings to be for the year going forward and get them to adjust your tax code so you don't have to bugger around with refunds or underpayments.
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Higher Rate Tax Payments Working Through Umbrella
Working through a brolly, do you start paying higher rate tax immediately on a pro rate basis (as I think you do in a perm job) or does it kick in when you have actually hit the threshold for the current tax year?
If it’s the former and you only work via a brolly for, say, 3 months in that year and you remain under the higher limit threshold then you’d be due a rebate I guess?
If it’s the latter then I guess all of a sudden you’re going to be seeing 50% of your earnings going to HMRC once you’ve crossed that line, which must be somewhat demotivational.
If any brolly people could enlighten me, I’d be very grateful.Tags: None
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