Help! Mortgage via an umbrella company (payslips) - advice appreciated.

[Sunshine2021]

I need some advice. I received and accepted an offer on my property which I've had for 9 years last Friday. Found the perfect property to buy last Wednesday and put an offer on it. Called Nationwide to discuss porting my existing mortgage and went through the DIP process. I was granted a DIP for £400k, value of property to buy is £725k and I have £325k deposit. Offer in at £685k - still waiting for response from vendor.

I'm currently employed by an umbrella company, with a yearly salary of £113,965 and advised Nationwide that I was permanently employed since October 2020. Nationwide requested 1 payslip. All good. However, when I looked in detail at my payslip - I saw my basic salary as £1,300, then a ton of commission and holiday pay. Completely SHOCKED!!! I thought going through an umbrella company inside IR35 meant I am deemed a PAYE employee.

I'm completely lost at what I can do. I did think to send Nationwide 3 months payslips and 3 months bank statements and an illustration of my salary they provided to me the other day stating my salary and how it's broken down with commission etc. and hope for the best. They either accept of reject. If they reject, I have an early repayment fee of about £12k which I guess is where the saved stamp duty will go as want to complete by June.

Anyone - please can you advise or point me in the direction where I can get some help.

[ladymuck]

Welcome to the forum, slightly wrong area to post but never mind.

I'm guessing you weren't a contractor when you first took out the mortgage and this is your first contract?

You're not a "proper" employee, you're a freelancer using an umbrella company for payroll purposes. I can't believe that the first time you looked at your umbrella payslip was now. You've had six months to get familiar with the way you're being paid and to understand what's being done to your earnings.

[hobnob]

However, when I looked in detail at my payslip - I saw my basic salary as £1,300, then a ton of commission and holiday pay. Completely SHOCKED!!! I thought going through an umbrella company inside IR35 meant I am deemed a PAYE employee.

Yes, you are a PAYE employee of the umbrella company. You will be paying employee NI on the combined amount (basic rate + bonus + holiday pay), and you will be paying income tax on that same amount minus any employee pension contribution.

Your basic rate is almost certainly based on minimum wage. I'm also going through an umbrella, and they used to pay me £327/week: that's 37.5 hours x £8.72/hour. This week it went up to £334.13, based on the new minimum wage of £8.91/hour. Either way, that's roughly equivalent to £1300/month.

[Lance]

commission?
Holiday pay?
To the sum of £8,500?

Maybe I'm missing something but this sounds like a loan scheme or other wheeze to avoid tax, and will become very problematic outwith the purchase of a property.

[hobnob]

commission?
Holiday pay?
To the sum of £8,500?

Maybe I'm missing something but this sounds like a loan scheme or other wheeze to avoid tax, and will become very problematic outwith the purchase of a property.

I think that's pretty standard for umbrellas. Holiday pay means that you get the money upfront (as you earn it) and then nothing when you take time off; the alternative is that you can ask them to hold onto it, and pay you when you take time off.

As I said in my previous post, the basic rate is based off minimum wage. The rest gets lumped into a different category, and the name might vary between umbrellas. Based on the few I've used:

• Sapphire DNP and NASA Umbrella called it "Additional Taxable Wage"
• Contractor Umbrella called it "Bonus"

I assume that this split is just to make life easier for the umbrella company, and there's nothing inherently dodgy about it.

[Lance]

I think that's pretty standard for umbrellas. Holiday pay means that you get the money upfront (as you earn it) and then nothing when you take time off; the alternative is that you can ask them to hold onto it, and pay you when you take time off.

As I said in my previous post, the basic rate is based off minimum wage. The rest gets lumped into a different category, and the name might vary between umbrellas. Based on the few I've used:

• Sapphire DNP and NASA Umbrella called it "Additional Taxable Wage"
• Contractor Umbrella called it "Bonus"

I assume that this split is just to make life easier for the umbrella company, and there's nothing inherently dodgy about it.

Sounds dodgy to me. But maybe I'm too sceptical.
does it have a gross figure on the payslip, that represents the total cash before any deductions? That's what OP is gonna need for a mortgage.

[hobnob]

Here's an anonymised version of my latest payslip. There's a gross figure for the total payments (basic rate + holiday pay + additional taxable wage), and hopefully the OP has something similar.

(There's no breakdown of employment costs, but it corresponds to apprenticeship levy + employer's NI + employer pension contributions. I copy all my payslips into an Excel file to verify that the amounts match what I'd expect.)

[cojak]

The term 'Bonus' is legit apparently, so you do need to rely on more than that.

Hi cojak,

Most compliant umbrellas use 'NMW and profit share/bonus' type wording in the employment contracts, so some of your terms may come up.


Thanks

Zeeshan

[eek]

I think that's pretty standard for umbrellas. Holiday pay means that you get the money upfront (as you earn it) and then nothing when you take time off; the alternative is that you can ask them to hold onto it, and pay you when you take time off.

As I said in my previous post, the basic rate is based off minimum wage. The rest gets lumped into a different category, and the name might vary between umbrellas. Based on the few I've used:

• Sapphire DNP and NASA Umbrella called it "Additional Taxable Wage"
• Contractor Umbrella called it "Bonus"

I assume that this split is just to make life easier for the umbrella company, and there's nothing inherently dodgy about it.

The split is there because if you have a proper employment contract with the umbrella - the umbrella company needs to pay you the basic rate (so minimum wage) for the hours you worked were a problem to occur with your agency and the agency did pay the invoice.

As I discovered going over some contracts over Easter - there are a number of "umbrellas" who even try to wiggle out of that basic level of employing you.

[Lance]

OK. So I think I understand my confusion.
I assumed monthly salary for the OP as he doesn't say.
If it's weekly then it makes more sense. I couldn't work out how being paid £100k+ p.a. turned into £1300 a month + holiday unless there was something dodgy.
Per week makes sense.