All UK umbrella companies operate under the same rules and are obliged to pay contractors under the PAYE rules. There are some companies that market themselves aggressively, saying they can increase your take home pay considerably – sadly this is not the case unless they are working in a non-compliant manner. If you work under an umbrella company, you will pay the same rates of tax and National insurance as everyone else.
This is how it works.
Your National Insurance contributions are deducted from your gross pay; this is calculated as a percentage of your total earnings and is the same for everyone.
Income Tax is then calculated on your taxable pay. Everybody has a tax code which will outline how much tax-free earnings they have in a given tax year. For instance 1100L means you can earn £11,000 before you pay tax and this is expressed as a weekly or monthly tax free allowance.
Before April 2016, most contractors could offset business expenses to reduce their tax bill, however the legislation introduced on 6th April 2016 changed things considerably and meant that any contractor who is under the Direction, Supervision and Control (SDC) of their client would no longer be allowed to claim tax relief on their travel and subsistence expenses.
If you are outside of SDC and can prove it, then you may be able to receive tax relief on your Travel and Subsistence expenses at the end of the tax year via your tax return.
One Click Umbrella will be happy to log your expenses and store copies of your receipts to help you complete your return.
We can even complete the return for you for a small fee (currently £125 plus VAT).
Cost to you
We don't want to confuse you with percentages, we don't want to take more of YOUR earnings off you because you earn more. Our margins are simple and will remain the same whatever happens. We only retain what we need to cover the work we do, no more, no less!