Like many contractors when the blanket assessments were done I was inundated with offers from Umbrellas. As I could see no IR35 light at the end of the tunnel I thought Id join an umbrella as soon as possible, as I was guessing it would be a bit chaotic by April with thousands of contractors looking for umbrellas.
By the time the Corona virus IR35 year long 'reprieve' came , I'd already signed the contract and had begun closing down my old limited company , bank account etc.
Yet what has followed is pretty horrible financially. As well as been a question this thread perhaps also acts as a warning for people next year to take care.
The invoice process for the agency is automated based on timesheets and the monthly invoice for March was produced and sent to the umbrella on 14th April. Because of this the Umbrella assessed my tax based on April 2020 /21 rates ie PAYE week 1 of the tax year, so the tax incurred includes approx £700 for Employers NI, even though my PAYE income 2019/20 is wll below the secondary threshold required before you have to pay 13.8% Employers NI
HMRC have also automatically reassessed my tax code based on 'unearned income' ie dividends that they expect I will earn this year (based on previous years dividends), although I wont earn any dividends under the Umbrella. They are recouping the money they believe I owe from me by changing my PAYE tax code to -£10,000 L and helping themselves via PAYE.
Does the above seem correct to anyone in the know regarding tax issues. It seems somehow wrong to be taxed for March work as if it is April. This wouldnt happen for a normal PAYE worker which presumably HMRC are trying to convert us to.
By the time the Corona virus IR35 year long 'reprieve' came , I'd already signed the contract and had begun closing down my old limited company , bank account etc.
Yet what has followed is pretty horrible financially. As well as been a question this thread perhaps also acts as a warning for people next year to take care.
The invoice process for the agency is automated based on timesheets and the monthly invoice for March was produced and sent to the umbrella on 14th April. Because of this the Umbrella assessed my tax based on April 2020 /21 rates ie PAYE week 1 of the tax year, so the tax incurred includes approx £700 for Employers NI, even though my PAYE income 2019/20 is wll below the secondary threshold required before you have to pay 13.8% Employers NI
HMRC have also automatically reassessed my tax code based on 'unearned income' ie dividends that they expect I will earn this year (based on previous years dividends), although I wont earn any dividends under the Umbrella. They are recouping the money they believe I owe from me by changing my PAYE tax code to -£10,000 L and helping themselves via PAYE.
Does the above seem correct to anyone in the know regarding tax issues. It seems somehow wrong to be taxed for March work as if it is April. This wouldnt happen for a normal PAYE worker which presumably HMRC are trying to convert us to.
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