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tier1seekr
27th September 2012, 20:58
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
28th September 2012, 20:51
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! :yay:

Good luck!