Umbrellas And Self Assessment/Tax Returns

[crimsonfin]

Hi

Another newbie question for you all.

I am currently using Parasol as my umbrella company and am wondering where I stand regards self assessment tax returns.

1. As im being paid through PAYE by Parasol do I need to complete a tax return ?
2. Do the Inland Revenue contact you to inform you that you need to complete one or do you "just know" yourself ?
3. Regards the 40% tax rate. HMRC state that higher rate rax is applicable on earnings over £36k. If im working to a daily rate how do I know if im earning over this amount (surely its not as simple as daily rate * 5 day week * 52 weeks in year ?)

As ever, thanks in advance for your thoughts

[Gonzo]

Hi

Another newbie question for you all.

I am currently using Parasol as my umbrella company and am wondering where I stand regards self assessment tax returns.

1. As im being paid through PAYE by Parasol do I need to complete a tax return ?
2. Do the Inland Revenue contact you to inform you that you need to complete one or do you "just know" yourself ?
3. Regards the 40% tax rate. HMRC state that higher rate rax is applicable on earnings over £36k. If im working to a daily rate how do I know if im earning over this amount (surely its not as simple as daily rate * 5 day week * 52 weeks in year ?)

As ever, thanks in advance for your thoughts

1. Possibly. If you have other income that is not being taxed at the correct rate. This would include bank interest if you are in the 40% tax band. You also need to declare capital gains if you have any, overseas income, letting income, the list is almost endless.

2. It is your responsibility to inform them. Mrs Gonzo did get a letter from them this week suggesting that she might need to get in touch with them, so they are a little bit proactive, but you shouldn't rely on that. I repeat, it is your responsibility to inform them.

3. You should by now know how much your earned during the 2007 - 2008 tax year. This is the period that the next return will need to cover.

[moorfield]

Parasol should also send you a P60 with the numbers you need for your self assessment.

[NotAllThere]

If you have any tax due that's not picked up by PAYE, then you must request a tax return. If everything is covered, then unless you're sent one, you don't need to fill one in.

Even if you've only got bank interest and share income, in addition to your umbrella payment, in your position, I'd request a return. You don't want any nasty surprises further down the road.

[VectraMan]

Regards the 40% tax rate. HMRC state that higher rate rax is applicable on earnings over £36k. If im working to a daily rate how do I know if im earning over this amount (surely its not as simple as daily rate * 5 day week * 52 weeks in year ?)

One of the problems of being with an umbrella is they tax you like an employee, which means it's assumed you earn the same every month. If you did a 3 month contract starting in April, but then were on the bench for 9 months, they'd have to tax you at the full 40% for those 3 months even though over the year you never earned £36K. You'd get the money back after completing the SA, but it can cause some short term pain.

Another good reason to go Ltd.

[Bob Dalek]

One of the problems of being with an umbrella is they tax you like an employee, which means it's assumed you earn the same every month. If you did a 3 month contract starting in April, but then were on the bench for 9 months, they'd have to tax you at the full 40% for those 3 months even though over the year you never earned £36K. You'd get the money back after completing the SA, but it can cause some short term pain.

Another good reason to go Ltd.

I went with Parasol (had to use a brolly, as went Perm to Contract at same place). I'd give them 8.5/10. Staff helpful, paid on time, etc. Their website's not quite sharp enough for my liking, though, by which I mean that there seem to be long-forgotten pages, etc.

By contrast, I went with an accountancy firm well-known and admired on CUK and have been genuinely shocked at their crapness - I only appointed them based on CUK feedback!

The assigned account manager's a twat who never, ever gets it right, even third time around. My wife has, in effect, now taken-on a second job double-checking the account manager's work. Ho hum. So, I'm off to A N Other accountants ASAP.

[crimsonfin]

1. Possibly. If you have other income that is not being taxed at the correct rate. This would include bank interest if you are in the 40% tax band.

its the bank interest which im worried about. going to sell the house soon and not really amused with the fact that mr tax man is going to want to take a big chunk of that ...

... anyone got the number of a good Swiss bank

one of these days im going to have to sort out the ltd company thing.

thanks to all for the advice