Umbrella questions about SDC expenses, pensions and Scottish tax bands

[gaz777]

Hi Everyone,

I've been contracting for ages, but this is my first post here. I've had a look, but apologies if my questions are already answered elsewhere.
The last 6 years I've used my own limited company, but previously I used umbrellas.

I'm in the process of agreeing to go back to a client I contracted for a few years ago.
They've done a CEST determination for the new role, but it hasn't ruled out or in. It seems the substitution question is all that's prevented an outside result.
The client is risk averse, and has decided to treat this as inside ir35 which will probably mean using an umbrella company. Given what's going on in the market just now, I'm happy to do that providing they increase the rate.

So question 1:
How does that put me with SDC and claiming expenses through an umbrella? CEST hasn't ruled me in and I suspect a manual determination would rule me out.
I live in Glasgow while the client is in Edinburgh. Previously (through my limited company) I expensed train travel when working on site, and hot-desk rent for days I worked from Glasgow (I'm not a fan of working from home).

Question 2a:
I have my own SIPP. Do any umbrella companies allow pension contributions into your own SIPP? Or do you have to use the umbrella's own pension scheme?
Question 2b:
Which umbrella companies allow you to make additional pension contributions ie above the statutory minimum by law?

Question 3:
I scoured the web last night, but couldn't find any umbrella calculators that took into account Scottish tax rates/bands. Are there any out there?
If not, can anyone give me the formula for working it all out (including expenses and additional pension contributions)?

Any help with these questions is very much appreciated!

Thanks in advance

[GhostofTarbera]

Umbrella questions about SDC expenses, pensions and Scottish tax bands

Question 1

NO expenses

No travel, no accommodation, no food, no accountancy fees, no new laptop no company car, no splitting dividends, no employing your wife , no dividends - all out of net wages

Question 2 and 3

You will find the client / agency will have a small list of umbrella companies for you to choose from (they don’t want a list of many to have to deal with - most have 4 or 5 so better to ask this question

But probably a NO on your sipp as umbrella comp won’t want Hassel of this for there tiny fee they get

Yes you can increase your pension contributions

You will end up with 62-63% of your gross rate in your bank personal account each month so if you are on £400 a day after expenses you get £250 net and if you include your travel time (I’ve done the 12 hour day) Glasgow to Edinburgh for months in the past you end up with £21 per hour


Sent from my iPhone using Contractor UK Forum

[BABABlackSheep]

If SDC doesn’t apply you can claim mileage according to the umbrella company I spoke to.

You can also claim training courses and equipment if they are needed to perform the contract role.

As far as SIPP is concerned..edited ** some do, need to check with them

[eek]

If SDC doesn’t apply you can claim mileage according to the umbrella company I spoke to.

You can also claim training courses and equipment if they are needed to perform the contract role.

As far as SIPP is concerned.. no. Although you can put money into the umbrella company’s Pension scheme and when you leave, you can transfer to your own SIPP. Same as any company pension I guess.

It would be a very brave umbrella company offering expenses post April based on the SDC piece - if you are using an umbrella because a company deems you inside that end client will be liable for the unpaid employers NI and the fraud sections within the act will be being played out.

[gaz777]

Thanks for the replies everyone

Firstly:

It would be a very brave umbrella company offering expenses post April based on the SDC piece - if you are using an umbrella because a company deems you inside that end client will be liable for the unpaid employers NI and the fraud sections within the act will be being played out.

So this is the key point. The client didn't deem me inside - CEST was no result, so they've gone the cautious route. As far as I'm aware, there's never been anything to stop an outside IR35 role being worked through an umbrella?
If I got a company to do a manual determination and it showed the role as outside, would that be enough for outside SDC too? Or are the rules different for IR35 and SDC determinations.

In terms of the take-home percentage, I really need a calculator or formula.
Firstly tax rates in Scotland are very different to the rest of the UK, so take-home pay can differ by thousands.
But also, I want to put as much as possible into my pension through salary sacrifice, but obviously need to leave enough to pay the bills.
I need some way to calculate these figures

[BABABlackSheep]

It would be a very brave umbrella company offering expenses post April based on the SDC piece - if you are using an umbrella because a company deems you inside that end client will be liable for the unpaid employers NI and the fraud sections within the act will be being played out.

Umbrella Company Business Costs & Expenses Explained

[eek]

Umbrella Company Business Costs & Expenses Explained

No that is for people who are outside IR35 but prefer to use an umbrella rather than using a limited company

Which expenses can contractors claim when working inside IR35? has a better overview of what you can or can't claim in that circumstance.

It would be a brave umbrella company who would allow you to use the SDC rules where the end client has a blanket ban on PSCs and a very brave agency that supported the umbrella's decision.

[cojak]

Umbrella Company Business Costs & Expenses Explained

Valid until April 6th 2020, then they are going to have to change that page.

[ladymuck]

Thanks for the replies everyone

Firstly:


So this is the key point. The client didn't deem me inside - CEST was no result, so they've gone the cautious route. As far as I'm aware, there's never been anything to stop an outside IR35 role being worked through an umbrella?
If I got a company to do a manual determination and it showed the role as outside, would that be enough for outside SDC too? Or are the rules different for IR35 and SDC determinations.

In terms of the take-home percentage, I really need a calculator or formula.
Firstly tax rates in Scotland are very different to the rest of the UK, so take-home pay can differ by thousands.
But also, I want to put as much as possible into my pension through salary sacrifice, but obviously need to leave enough to pay the bills.
I need some way to calculate these figures

The client HAS to make a decision one way or the other if they want you to do work for them from April 6 onwards.

So, it sounds to me like they've decided you're inside based on their risk adverse approach. They don't want to manage the payroll so are taking the easy option of asking you to use an umbrella.

[eek]

Thanks for the replies everyone

Firstly:


So this is the key point. The client didn't deem me inside - CEST was no result, so they've gone the cautious route. As far as I'm aware, there's never been anything to stop an outside IR35 role being worked through an umbrella?

Sorry cautious route to me means inside IR35.

As for calculations with Scotland involved you will need someone to run the calculations for you. And that will require asking an umbrella to do it for you.