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IR35 post April 2020: Choosing a legitimate Umbrella

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    #11
    Blimey lol :
    'CUK forum personality of 2011 - Winner - Yes really!!!!

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      #12
      Originally posted by eek View Post
      This is covered in the FAQs I spent ages researching which you seem to want to ignore while asking utterly pointless questions about:

      See the bottom bit of http://forums.contractoruk.com/publi...ml#post2360157 . But as a hint the umbrella would treat your expenses as income so you would get a nasty surprise.
      OK let me see if I can help clarify, there were two types of expenses that an umbrella company could process pre April 2016. The first were for tax relief purposes and classified as "non-chargeable" expenses, generally covering the travel, subsistence and accommodation that the client was not paying for. These are no longer allowable via any compliant umbrella.

      The second type was, and still is (allowable post April 2016), classified as "chargeable" expenses. These are the ones that the client is agreeing to reimburse in full. These CAN still be processed via a brolly and will be included on the invoice and reimbursed to the contractor without taxes. The only difference is when a client is offering to provide an allowance for a contractor, this is applied in a different way; say the contractor is given a £50 allowance for travel, food etc a day, the umbrella will receive monies from the agency / end client for the £50, they should then ask for receipts. If the contractor only spent £40, then the remaining unreceipted £10 will be taxed with the salary.

      Hope that helps

      Comment


        #13
        Originally posted by lucycontractorumbrella View Post
        OK let me see if I can help clarify, there were two types of expenses that an umbrella company could process pre April 2016. The first were for tax relief purposes and classified as "non-chargeable" expenses, generally covering the travel, subsistence and accommodation that the client was not paying for. These are no longer allowable via any compliant umbrella.

        The second type was, and still is (allowable post April 2016), classified as "chargeable" expenses. These are the ones that the client is agreeing to reimburse in full. These CAN still be processed via a brolly and will be included on the invoice and reimbursed to the contractor without taxes. The only difference is when a client is offering to provide an allowance for a contractor, this is applied in a different way; say the contractor is given a £50 allowance for travel, food etc a day, the umbrella will receive monies from the agency / end client for the £50, they should then ask for receipts. If the contractor only spent £40, then the remaining unreceipted £10 will be taxed with the salary.

        Hope that helps
        Now the second example is interesting as I don't think that covers the example being talked about here so likes go back to the example I linked to.

        I am given a 3 month contract in London (1,day a week) and Newcastle (4 days a week) where I claim and receive expenses for the journey and hotel in Newcastle. Now because I am using an umbrella to pay me and hmrc regard my primary office as Newcastle are those expenses claimable or not?

        Now remove the day a week in London so it's a contract in Newcastle 5 days a week via an umbrella with travel expenses covered. Given that it's a 3 month contract with 65 days spent working in Newcastle is that still deductible before tax?

        Finally it's worth saying that every permie I know with a home based job also has a default local office that the cannot claim travel to. For one client that was London for virtually everyone including those in Manchester as they only had one UK office.
        Last edited by eek; 22 February 2017, 22:48.
        merely at clientco for the entertainment

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          #14
          So lets start with the fact that an employee cannot claim a tax deduction for his "normal" commute. That is well documented and accepted. But, this does not stop his employer from providing him with a free bus pass, a company car with petrol allowance or to put him up in a hotel near the office if he lives far away and only attends the office 2 days a week. I accept that there may be BIK considerations but let's just discuss the basic situation without that further complication (one question springs to mind though: can a "deemed employee" be faced with a BIK charge at all, given he is only an employee for income tax purposes?)

          If the employer decides that it is in the interest of his business to provide travel or accommodation for his employee then this is not the same as the employee "claiming a tax deduction for his normal commute".

          This is the gist of my original question which Lucy seems to have answered with regards the "chargeable expenses" provision. I guess that a lot of former PSCers who are forced to consider the umbrella route will be asking a similar question "as a deemed employee, what else can I get from the client/employer to soften the blow of the double hit of losing T&S and increased taxes from being placed on payroll".
          Last edited by breaktwister; 22 February 2017, 23:12.

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            #15
            You could write to your MP about it.
            'CUK forum personality of 2011 - Winner - Yes really!!!!

            Comment


              #16
              one question springs to mind though: can a "deemed employee" be faced with a BIK charge at all, given he is only an employee for income tax purposes?)


              A question for you: what is the relationship between taxation and a BIK?

              Now can I ask you stop wasting people's time please?
              Blog? What blog...?

              Comment


                #17
                Originally posted by breaktwister View Post
                Another umbrella related query: I am talking to a few agencies regarding PS positions and have said that I would consider taking an "inside IR35" role if something could be arranged regarding T&S. My logic on this is that, if I am deemed to be an employee of the client then why can they not put "away from home on employers business" expenses through their accounts as a legitimate business expense?

                My question is how such an arrangement would be billed and processed via an agency and umbrella?
                The way to do it could be to book your travel/accom via the permie process.

                I had an arrangement on before where I used the internal admin to book hotels and trains tickets and then no money ever changes hands. They printed the tickets and handed them to me (admittedly this was just for three weeks away)

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                  #18
                  Originally posted by eek View Post
                  Now the second example is interesting as I don't think that covers the example being talked about here so likes go back to the example I linked to.
                  In your example the home to work expenses etc are irrelevant if the client is agreeing to reimburse them in full. The rules for the "temporary" workplace would not be considered, if they are chargeable the client technically can agree whatever they see fit.

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                    #19
                    So the umbrella company take EmployERS NI and their fee out of my gross pay, and then employEES NI and PAYE tax out of my 'taxable pay'. If I wasn't under an umbrella after 6th April, i.e. if on an inside-IR35 gig but using my PSC via an agency, who would pay the EmployERS NI? The end client, agency or still me?

                    Comment


                      #20
                      Originally posted by NHS1979 View Post
                      So the umbrella company take EmployERS NI and their fee out of my gross pay, and then employEES NI and PAYE tax out of my 'taxable pay'. If I wasn't under an umbrella after 6th April, i.e. if on an inside-IR35 gig but using my PSC via an agency, who would pay the EmployERS NI? The end client, agency or still me?
                      You, effectively. Mechanically, it's paid by the deemed employer. In reality, it will be paid by the contractor through an initial deduction from their rate, unless the deemed employer can negotiate an increase from the PSB.

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