You ask... we answer!
I'm going to work abroad: shall I go Umbrella or Limited?
Q. With not as much work in the UK I am looking at France, Holland and Germany for my next contract, these will be in the region of £600 a day and I will need to pay for flights (approx £300 a week) and accom (approx 1000 a month). Can I contract through my UK Ltd company if the contract is with a UK based agent? If not what sort of pay can I expect per month?
A. Good Afternoon Mike,
Thank you for your query.
Before we can comment or provide illustrations I’d just need a bit more information on your contracts.
As for the limited company set up the agent location isn’t what will be queried, what will dictate where tax/NI is due is mainly the client location. For these potential positions in France/Holland/Germany, are they working for local based clients or is it a UK based client posting you overseas?
You need to determine who will eventually be paying you, will it be a French client paying a UK agent paying you then it is French taxes due as the client themselves will be making their declarations to the French authorities for your work performed so your year-end returns will need to mirror that as that is what France will expect.
Similarly what your contract states is also important, if your contract states work performed in France you would expect French deductions. However if your contract states UK with business trips overseas then you would expect UK deductions.
For example having a contract saying you work in France for a French client would immediately raise concerns if nothing was declared to France so they could potentially chase you in future for payments.
However there are rulings around this but just for very short term placements, it is possible to work overseas for a small amount of time in a complete calendar year (generally less than a month) but the rules do differ from country to country and these can be risky if for example you decide to take an additional position in the same country in future it could mean all past income is subject to local taxation.
But in general it’s never normally advised to use a UK limited company overseas because when working overseas you’re subjected to local laws rather than UK laws.
Please do get in touch if you want to provide the above information and goet a detailed illustration.
European Accounts Manager
I'm working on and offshore in the same financial year
Q. Hi, I need your advice. I'm a expat (Portuguese) and I'm going to start working in the UK. I'm a contractor for a company through an Agency. I need your advice to check how taxes work in UK and what's the best solution for me. I'm married, waiting for 1st child, my wage is £550/day when I'm in UK and £650/day when I'm offshore. Thanks in advance for your consideration and attention. Regards, Nuno
A. Good Afternoon Numo,
Thank you for your enquiry to I-Paye.
As it will be a UK Contract you will be liable for UK Income Tax and National Insurance.
Hiowever, if in the same financial year you have worked both in the UK and in Portugal, you might want to seek professional tax advice in order to file a correct tax return and avoid having to pay tax twice, our sister company SPi Accountancy can help with this, or you might want to call your accountant if you already have one.
Based on the information you provided we could do an illustration on 20 days onshore, 20 days offshore, or the exact balance of onshore and offshore days if you let us know how many days you will spend on and how many offshore.
Also, if you have any expenses, we could add those to your illustration and they would help reducing the amount of tax and NI you pay til we reach down to the treshold of minimum wage, after which you will pay full tax and NI whatever your expenses.
For example, 20 Days @ £650 a day, with no expenses submitted, would give you a net income after tax and NI of £7,267.63.
Please note that while you are Offshore you are only able to submit commuting expenses to and from your place of work .
If you wish to provide me with these then I can produce another illustration.
Each Month you will incur four deductions:
3.Employees National Insurance
4.Employees National Insurance
Please let me know if I can help any further or give me a call on 0151 443 6829.
I look forward to hearing from you soon
Pension auto enrolment
From October 2013, all contractors going through umbrella companies are compelled to join a pension scheme.
All I-Paye Employees and Contractors are automatically enrolled in our pension scheme with NOW:Pensions from day 1, and have the option to opt out if they wish to.
If you have any questions about pension auto-enrolment feel free to give us a call on 01514493500 and we’ll be happy to help.
Who do I talk to if I have a question?
You can give us a call on 0151 449 3500 anytime Monday to Friday, 9:00 to 17:30.
Or you can write to email@example.com
How quick will you respond?
We aim to respond within 4 working hours from your request.
Delegate someone to talk to I-Paye for you
If you are working shifts or you think it could be difficult for us to talk to you while you’re on site, you can delegate someone to talk to us. You can either give us a call and let us know their name, or send us a fax/email/letter.
When the person you delegated calls us, he or she will be asked to answer some of your security questions. So you need to make sure he or she has the correct answers.
Holiday pay, how does it work, how’s it calculated, how do I claim it?
Going through an Umbrella Company you are entitled to holiday pay. This is 12,07% of your earnings, and you have the choice of getting it with every payment or asking us to retain it and build a holiday pot for you. The holiday pay money will then be withheld and can be paid out into your bank account any time before presentation of written request.
We need to receive your request to release holiday funds by 17:30 on the Tuesday before the Friday the money is due on.
Holiday pay money is taxable.
If my circumstances change, can you advise on whether I would be better off trading as ltd company?
We can advise on what umbrella option is best for you, and depending on your circumstances we can suggest you might want to explore the Ltd company option. Should you want to do this though, we feel it’s best that advice comes from expert and qualified consultants.
Our sister company SPi Accountancy specialises in helping you find the best Limited solution according to your unique circumstances.
You can give them a call anytime and talk to one of their qualified consultants; together you can find the best option to suit your requirements.
SPi Accountancy contacts are: 0151 480 9672 firstname.lastname@example.org
Can I be paid self employed or receive dividends from an Umbrella Company?
Umbrella Companies are required to pay all income out to the individual worker as Employment Income only.
Will I be I danger to be caught by IR35?
No. When you go through an umbrella company you are classed as an employee, so IR35 doesn’t apply.
Which services do you provide?
At I-Paye we provide UK and International Umbrella Services.
If you choose to through us, we will be classed as your employer and process your payments PAYE. This means that every time we process your payment we will calculate, deduct and pay for you Income Tax, Employees and Employer NI.
We will then send you a payslip and put your net salary into your nominated bank account.
The main benefits of going through an umbrella company are: you can submit your expenses which will bring down the amount of tax and NI you pay, you are entitled to statutory payments and holiday pay, and covered by insurance.
Fees/ set-up and exit costs
For UK contractors I-Paye offers a wide and comprehensive range of services: I-Temp, I-Travel, I-Lodge for contractors on temporary assignments, I-construct, for individuals contracting in the construction sector, I-Drive, to meet the specific needs of those driving for work, and coming soon I-Teach, for supply Teachers. Our fees vary between £11 and £25 depending on the service that suits you best.
There are no set up and no exit fees. And no umbrella company should charge any!
How and when will I get paid?
The frequency of your payment depends on your agreement with the agency you are going through/ the end client
Weekly payment: we will receive your hours from the agency on a Wednesday, calculate your pay on a Thursday and money will hit your bank account on Friday.
Monthly payment: we will receive the timesheet at the end of the month, process the payroll and money will hit your bank account between the 10th and the 15th of the month.
Who do I send my timesheets to?
Unless stated otherwise, or agreed with the agency/ the client you are working for, your timesheets need to be sent to the agency as soon as possible after the end of the week/month. This will ensure payroll runs smoothly and there are no delays in the payments.
Expenses, how does it work?
Claiming expenses is one of the main benefits of joining an Umbrella Company.
Expenses can be claimed for the first 24 months of work on the same site, a detailed guide of which expenses are permitted can be found in our download centre.
The way expenses work is: they will bring the amount of taxes and NI you pay down to the threshold of minimum wage.
Expenses are NOT refunded, but by submitting them your taxes and NI will go down and you will have more of your salary left for yourself.
In order to claim expenses you will have to fill in an expense form each week/month.
You will receive a standard meal allowance based on the number of hours you are away from home. For any other expenses you might want to claim we will need to see a copy of the receipt. You will also need to keep the original receipt in the event of an investigation being carried out on your case.
We will need to receive your expenses by 12:00noon on the Tuesday before the Friday your payment is due. You can fax, email, or post your expenses. We are unable to take your expenses over the phone.
If you want a detailed illustration of what your weekly/ monthly take-home would be by going through us, call one of our Account Managers on 01514493500 or email Nicola.email@example.com
You can also watch our expenses video here.
Which tax code will I be on?
When you start with us, we will be happy to receive your P45 if you have one. This will ensure you are put on the correct tax code.
In absence of a P45 you will be placed on an emergency tax code until you provide us with a verified copy of your passport/ right of work in the UK document.
After we receive all your documentation you will be placed on the standard tax code until further notice from HMRC.
Am I entitled to statutory payments? How does it work?
Going through I-Paye you will be classed as our employee and entitled to all the normal employee’s benefits, including statutory payments.
The main requirement to be entitled to statutory payments is that you need to be with us for 12 weeks before placing the request.
There are of course different procedures for each type of pay (sick pay, maternity pay etc.) and we will be happy to explain everything in detail if you give us a call on 0151 449 3500.
Am I covered by insurance?
Yes you are, please see below all liabilities:
- Employers Liability £10,000,000
- Public Liability £5,000,000
- Professional Indemnity £2,000,000
- Personal Accident £20,000
All provided free of charge.
Are there any extra benefits for me when joining I-Paye?
- We will always advise you based on what's best for you, even if this means you will not join I-Paye.
- You can be sure you will have your money on time, every time.
- Your taxes and NI contributions are calculated by the rule and paid on time.
- We do everything in compliance with the law and HMRC regulations.
- We are a UK based company, so there are no ‘offshore worries’.
- You will be auto-enrolled in our Pension Scheme but you can opt out if you wish to.
What happens at the end of my current contract?
You can still stay with us, and sit on our system for up to 12 weeks while waiting for a new assignment. No fee is due if we don’t process your payroll.
At the end of the 12th week our system will automatically make you a leaver and your P45 will be requested from HMRC.
If you are switching from one assignment to another, but with the same agency, please give us a call and let us know your new site location. We will send out a new assignment schedule for you to sign and send back.
If you are switching assignment AND agency, please give us a call and let us know the name of the new agency, a contact number, and the name of a consultant we can talk to. We will give the agency a call and run the transition for you in the smoothest possible way, and once everything is completed we’ll send out a new contact for you to sign and send back.
What happens if I want to leave or find a permanent job?
If you want to leave us, we will need a request in writing. There is no exit cost, and once your written request has been received we will make you a leaver on the system and request your P45 from HMRC. This might take up to 10 working days.
What happens at the end of the tax year?
If you have been with us for one financial year, AND the assignment with us was your only source of income, you won’t need to file a self-assessment or a tax return.
If you have been on different assignments, some of which not as i-Paye employee, if you have worked abroad, or have an alternative source of income, then you will need to file a self-assessment form.
This can be easily found on the HMRC website.
If you think you need any help, or advice, our sister company SPi Accountancy can help!
They can prepare and file your self-assessment and tax return for you, the only thing you’ll need to do is providing them with all your payslips/invoices, and they’ll do the rest!
To have a chat with one of SPi's friendly advisors you can call Amanda Evans, SPi Practice Manager, on 0151 480 9672, or you can watch their short and comprehensive video here
Will you provide confirmation to support credit/mortgage application?
Yes. As your employer, we can provide information on your salary. A formal request will need to be presented to us in writing.
Can I use an Umbrella Company Overseas?
The simple answer is yes. However, if an individual is working in Europe then careful consideration must be given to local Taxation and Social Security rules, as well as those on the UK side. you can find out more on our Overseas Services page.
I want to Join, how does it work?
Request an application form or contact us: 0151 449 3500 firstname.lastname@example.org
What else do I need aside the registration form?
We will need to see a proof of your right to work in the UK, even if you are a British citizen. This is requested by HMRC in order for us to place you on the correct tax code.
British and EU Citizens must provide one of the two options below:
- Front Cover of your passport and a clear copy of your picture page of your passport verified by your contact at the agency or by your site manager.
- Copy of your full birth certificate verified TOGETHER WITH proof of National Insurance Number verified
None EU citizens must provide Valid Right To Work in the UK Documents
How long does it take?
The registration consists in two parts: the first part where we explain in full how the umbrella process works, and you can ask us all the questions you can think of. And the second part where we take your details and finalise the registration. The whole process can take between 10 and 20 minutes.
What happens after the registration?
We will send out your contract for you to sing and send back, and all the documentation you need, including expense forms, expense guide etc.
You will be assigned a compliance and a payroll manager, and given all their contact details, so you can get in touch anytime should you have any questions. We will notify the agency you have registered with us, and once they start sending us your hours, we will start process you payroll. We will be here for you all the time, you can call us anytime, and we will be happy to assist.
Call I-Paye now on 0151 449 3500