Tier 1 Extension - Issue with Earnings via Umbrella...

[tier1seekr]

Hi Members!

I understand there are a number of threads for Umbrella earnings, but somehow I didn't get the required answer and hence, posting this as a fresh query. Expect speedy responses from you all..as extension is nearing..

To quickly explain my case in detail... (assuming I'm contracting through an Umbrella)

Let's say my monthly invoiced amount to the agency (by my Umbrella) is £3000 a month.

Out of this £3000, Employer's NI (approx £320) and Umbrella admin charges (£100) are deducted first. So, the remainder amount i.e., 3000-320-100 = £2580 is what is reflected as Total Gross Pay / Gross for Tax in my payslip. This Gross (£2580) is further sliced as following... (all figures are approximate)

Income Components:
----------------------------
Commission - £1900 - (A)
Holiday Pay - £280 - (B)
Salary - £400 - (C)

Deductions:
----------------
PAYE Tax - £630 - (E)
Employee's NI - £180 - (F)

Net Pay:
------------
(A+B+C) - (E+F) = £2580 - £810 = £1770

In this case, my Gross Pay in the payslip no where reflects the invoiced amount i.e. £3000. Instead, everywhere it shows £2580 (deductions are Employer's NI and Umbrella admin charges here).

In the payslip, there are two mentions pertaining to the Gross Income as follows:
Total Gross Pay £2580
Gross for Tax £2580

Now these two figures to my understanding, should be £3000 and £2580 respectively. What's the reason to have two separate headers, if the figures are same? Any ideas?

£3000 is what the Total Gross Pay I expect in the payslip, for my Tier 1 visa to extend. If it's £2580, it would be a problem to score points.

Please let me know what would be the Gross Income which will be considered by Home Office? (£2580 or £3000?)

Also, is the division of Gross Taxable Income (£2580) into Commission, Holiday Pay and Salary, a problem for visa extension?

Best Regards!

[Wanderer]

Please let me know what would be the Gross Income which will be considered by Home Office? (£2580 or £3000?)

Under UK law, an employer makes a National Insurance contribution on behalf of the employee. As you observe, this is about 12% of the gross salary. My guess is that the Home Office is probably going to see your gross monthly salary as £2580, not £3,000.

It's best that you get some professional advice from an immigration advisor who understands the system otherwise you may find that your visa doesn't get renewed.

Alternatively, you could ask for a pay rise!

Good luck!