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Parasol = Thats a lot of deductions!

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    #21
    Originally posted by malvolio View Post
    What I don't get is why someone on £850 a day is using an umbrella and worrying over the odd hundred quid when they're paying around £2k extra tax a month.... Still, to each their own, I suppose.
    Is someone caught by IR35 really paying around £2k extra tax a month by using an Umbrella compared to a LTD company?

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      #22
      Originally posted by malvolio View Post
      What I don't get is why someone on £850 a day is using an umbrella and worrying over the odd hundred quid when they're paying around £2k extra tax a month.... Still, to each their own, I suppose.
      I wish I was on £850 a day, that's a monthly pay slip. Besides my friend I'm going to be taking your advice and going Limited very soon. All I need was some good advice and some gentle persuasion and being shafted was more than a little persuasive
      In Scooter we trust

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        #23
        Originally posted by AnnaO View Post
        Hi All

        I have recieved my payslip from Parasol and the deductions show:
        Employee nationl insurance = 300.96
        PAYE income tax = 497.20

        Previous pay this period = 681.98!!!

        The 681.98 is what I earned in October (started the last week in oct)

        So I cant figure out why it is down as a deduction. Have you guys had this on your Parasol payslips?

        Regards
        Anna
        Well, I got a response if anyone want to bother reading it. Seems unfair that because the agency and parasol didnt pay me for Octobers pay until Nov 22nd - I get hit with high tax. Think I will go Ltd.

        Dear Anna,

        On looking into your query, I can advise that you have received x 2 payments in the same tax month.

        Your tax is calculated on your estimated yearly earnings. This means that each time a payment is received in and processed for you, the amount in would be multiplied by the amount of weeks in the year to estimate what you will earn in a complete tax year. Your tax is then calculated on that basis.

        As both payments were received in the same tax period, this effectively doubles your earnings and will mean that you may pay more tax in that particular period than you normally would.

        For example, if a payment is processed on 14/11/2011 and was based on £1,500, your estimated yearly earning would have been based on you receiving that amount each period (week/month) for the tax year. Then on 30/11/2011 you receive another payment and this was for another £1,500, again your tax would have been calculated on you earning this amount per period (i.e. week/month) for the rest of the tax year. Each time you receive a payment your tax calculation will vary, as your estimated yearly earnings will vary. This is why sometimes your tax can look a little higher at times.



        Your tax will fluctuate over the period of the tax year, however, If you are still concerned that you have paid too much tax by the end of the financial year you can send your P60 form to HMRC who will do a few calculations on your behalf and if you have paid too much, they will put a nice cheque in the post for you.



        Also, when you receive two payments within one tax period you will receive a payslip for your first payment processed. However, when your second payment is processed within that same tax period (i.e. month/ week), you will receive a second and edited pay slip, inclusive of the details of the second payment processed. Your second pay slip produced will contain the details of your first payment and your second payment, and will be shown as one lump sum. Your tax will be shown as calculated to incorporate both payments as one received within that particular tax period

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          #24
          Ouch that blows, definitely go LTD there's so much information on here to help get started not to mention the wealth of experience that the posters on here have
          In Scooter we trust

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            #25
            Originally posted by Wary View Post
            Is someone caught by IR35 really paying around £2k extra tax a month by using an Umbrella compared to a LTD company?
            Nope not if they're inside IR35
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              #26
              Originally posted by LisaContractorUmbrella View Post
              Nope not if they're inside IR35
              Exactly. So malvolio's MASSIVE-saving argument should have been directed at "paying IR35" v "not paying IR35", rather than LTD v Umbrella.

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                #27
                Originally posted by Wary View Post
                Exactly. So malvolio's MASSIVE-saving argument should have been directed at "paying IR35" v "not paying IR35", rather than LTD v Umbrella.
                I wasn't being entirely serious. I had kind of assumed it was a monthly payslip...

                However, you save a few percent through your own limited even inside IR35, and around 12% if you're outside and can take dividends. More to the point, you know exacty what you're being paid and in what tax periods. Parasol are right about double payments inside tax periods, but that's because they're working on weeks rather than months and on occasion they won't align. And that's becuase some people want paying weekly rather than monthly, for some reason and clearly Parasol don't want to run two payment streams...

                HTH. Probably doesn't.
                Blog? What blog...?

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                  #28
                  Originally posted by Wary View Post
                  Exactly. So malvolio's MASSIVE-saving argument should have been directed at "paying IR35" v "not paying IR35", rather than LTD v Umbrella.
                  There aren't MASSIVE savings if you are inside IR35 - your salary still has to be processed through PAYE so the tax principals are identical. The only difference is that 95% of income is taken as salary with a Ltd Co with the other 5% being retained within the company
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                    #29
                    Originally posted by malvolio View Post
                    I wasn't being entirely serious. I had kind of assumed it was a monthly payslip...

                    However, you save a few percent through your own limited even inside IR35, and around 12% if you're outside and can take dividends. More to the point, you know exacty what you're being paid and in what tax periods. Parasol are right about double payments inside tax periods, but that's because they're working on weeks rather than months and on occasion they won't align. And that's becuase some people want paying weekly rather than monthly, for some reason and clearly Parasol don't want to run two payment streams...

                    HTH. Probably doesn't.
                    Mal what are you on about?? It has nothing to do with an umbrella company only processing weekly payroll at all. Each payroll period has an element of your tax free allowance within in and this is applied to your total earnings within that period. On occasion payment for assignments may be received from the agency on 2 different dates within a month (for whatever reason) - there are 2 options in these circumstances - either the second payment can be held until the next payroll period begins i.e. 6th of the following month for monthly payments or the original payment that was processed can be rolled back (or reversed if you prefer), the second receipt can then be added to the original and they are then both processed together. It appears as though more tax is being paid but that it because the full tax free allowance was applied when the initial payment was processed and the same tax free allowance was used when the 2 payments were added together so you have higher earnings that are subject to tax. PAYE or Pay As You Earn means that your tax free allowance will be applied to your earnings over a 12 month or 52 (or 53) week period and you will pay tax accordingly so in the scenario here you will not be paying extra tax, just earlier but then again you will have had the benefit of your salary earlier too

                    HTH
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                      #30
                      Originally posted by LisaContractorUmbrella View Post
                      Mal what are you on about?? It has nothing to do with an umbrella company only processing weekly payroll at all. Each payroll period has an element of your tax free allowance within in and this is applied to your total earnings within that period. On occasion payment for assignments may be received from the agency on 2 different dates within a month (for whatever reason) - there are 2 options in these circumstances - either the second payment can be held until the next payroll period begins i.e. 6th of the following month for monthly payments or the original payment that was processed can be rolled back (or reversed if you prefer), the second receipt can then be added to the original and they are then both processed together. It appears as though more tax is being paid but that it because the full tax free allowance was applied when the initial payment was processed and the same tax free allowance was used when the 2 payments were added together so you have higher earnings that are subject to tax. PAYE or Pay As You Earn means that your tax free allowance will be applied to your earnings over a 12 month or 52 (or 53) week period and you will pay tax accordingly so in the scenario here you will not be paying extra tax, just earlier but then again you will have had the benefit of your salary earlier too

                      HTH
                      Yes, I do actually understand that. I used to get the same effect when I worked for a company that paid you every four weeks regardless.

                      But wouldn't it make the process a lot more comprehensible to your users (or, to be precise, Parasol's users) if the monthly payroll only ever sat inside one monthly tax period?
                      Last edited by malvolio; 6 December 2011, 16:40.
                      Blog? What blog...?

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