No loop holes, no scams, no fishy offshore Cayman Island accounts, yes it really is possible to take home 100% of your contract without getting in trouble with HM Revenue and Customs.
100% take home from umbrella
Firstly, let us explain how you can quite legally and without penalty take 100% of your contract.
All you have to do is take a small minimum wage of say £5,400 which will keep you below the tax threshold and then plough the remaining income into your pension. So, if you are prepared to work self-employed and live on a meagre £103.84 per week and are happy to defer your life for say the next 20 – 30 years it’s a great plan. However, we don’t expect this life plan to appeal to all tastes.
Be cautious of take home pay claims
Like all commercial companies, we keep a close eye on what is going on within our industry and especially what our competitors are up to.
We are continually surprised and sometimes entertained at how the level of take home pay keeps creeping up, we’ve seen adverts offering 75%, 79%, 80% and now 85% take home pay. So we thought we would explain what utter nonsense these outrageous claims are and why you should be very careful about signing up to an umbrella company who use promises of take home pay as a hook to sign you up.
All umbrella companies are the same!
The heading above probably isn’t one you would expect us to use, after all aren’t we supposed to say how different we are and how much more you will take home using ContractorUmbrella? Well the fact is we are all the same, let’s get a few things straight:
- 1. All umbrella companies are the same ‘tax wise’. All should operate PAYE, if they don't then you should have the scheme that they are offering vetted very carefully by a skilled professional as you could end up being liable for additional tax at a later date.
- 2. All umbrella companies operate under the same legal framework; all should have an overarching Employment Contract in place which you should sign before any payments are processed.
- 3. What one umbrella company can do for you, all other umbrella companies can also do.
- 4. Any umbrella company that encourages you or infers that it’s OK to make inflated expense claims really has very little to worry about as it is YOU and not them who will be liable for back taxes and penalties.
Now we do openly agree that high unattainable take home pay advertisements are very attractive and clickable, after all more money was probably high on your check list of reasons to go contracting in the first place, that along with more freedom, less office politics and to finally be paid a reasonable amount for your skills.
However, please, please be cautious of using umbrella companies who use this very shiny of objects ‘high take home pay’ as a way of cajoling you into using them.
Find below a few hints and tips on finding an umbrella company that will be right for you:
- 1. Smooth efficient process (usually comes from being in the market for a few years).
- 2. Gives professional advice about taxes and allowances. Advice that will let you take advantage of every legal expense and allowance without fear or knock on the door from HMR&C at 10pm.
- 3. Dedicated account managers so you have one person looking after your affairs and not a room of call centre staff where you have to repeat who you are and what you do each time you call.
- 4. Commitment to customer service – something that many UK companies seem to forget; does the telephone ring more than three times? Is it answered by a real person or an infuriating press one or press two automated system.
- 5. A professional accreditation that shows the umbrella company’s processes have been audited and are compliant with HMRC regulations.
Remember that you are the only one who has anything to lose, if you fraudulently claim for something you and only you will be liable, HMR&C won’t listen to your claims that the umbrella company said it was OK.
Need more evidence visit our BN66 – Offshore Schemes.
You may also find the following pages and guides useful:
- Umbrella company myths and facts revealed.
- FREE downloadable Contractor guide
- Contractor Guide to IR35
- New and updated Expenses Guide
If you would like to appoint ContractorUmbrella click here.
If you have any question about contracting or would like any further advice, please either call our new client services helpdesk on 01206 713 680 or e-mail firstname.lastname@example.org.
ContractorUmbrella is one of the longest standing and most respected Umbrella Companies in the UK. Established in 2002, it is now recognised as being the market leader with 99% customer satisfaction, but you don't have to believe us, take a moment to read what our clients have to say about us. We are totally committed to customer service and are the only company of its type to offer a full money backed service guarantee.
ContractorUmbrella is sister company to Dolan Accountancy, Accountancy Built on Reputation from the Founder and Team that built the UK’s largest firm of Contactor Accountants.