When you get work through an agency, it will often be suggested that you sign up with an umbrella company. So what exactly is an umbrella company? In a nutshell an umbrella company is just like any other employer. It employs you, under a contract of employment, as a PAYE employee and signs a separate contract with the agency to provide services. The main advantage of being employed by an umbrella company, like Simplyco, is that you may increase your take home pay because you can claim certain expenses, such as travel and subsistence, when you are working on a temporary site.
A temporary site is a location that is not considered to be your normal place of work. If you know you are going to work somewhere for 24 months or more you can’t claim these expenses because it would be considered your normal place of work. Be careful which umbrella company you choose and avoid those that do not ask you to support your expense claims with receipts. This could land you in hot water with the HMRC in later years. You should also give a wide berth to umbrella companies that say they are HMRC approved and especially those that make wild claims such as “take home 85% of your earnings”. For a start, HMRC do not approve anyone and if you are able to take such a high level of earnings home with you then you need to ask whether the umbrella company is operating in a compliant manner. It is you the tax man will chase for unpaid tax, if they are not.
Simplyco do everything by the book. Contractors sometimes find it a bit frustrating when we insist on receipts or challenge the claim they have submitted but overall they appreciate the fact that everything we do is ultimately to protect them from any future penalties, fines and tax demands.
Simplyco are expert contractor accountants and provide a fully compliant umbrella service to contractors, freelancers, interims and locums. To enquire about our services, please give us a call on 01900 898 440 or email email@example.com.
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