Tax credits and contract work

[Jaysmummy]

OH is currently in a contract job.

So he goes through an agency. He is classed as self employed as in the fact that he has to sort his own NI and Tax and he pays an umbrella company to do this for him weekly.

Can anyone tell me whether he is classed as employed or self employed for tax credit purposes? I recieved my form this morning but don't know what he would be classed as!

 

[My_First]

Does he invoice the agency? Then he is self employed.

 

[Jaysmummy]

I don't think so.

I think the company he works for give his wages to the agency and then it goes through the umbrella company before being paid to him?

He doesn't send invoices to anyone I don't think.

 

[My_First]

Are you sure he sorts out his own tax and ni or dies the umbrella company sort it?

Look at it another way:

In self employed, pay my own national insurance direct to hmrc and do a self assessment each year for tax owed.

Your oh has his tax and ni paid through the umbrella company and assume he doesn't self assess therefore he's employed by the umbrella company.

 

[Jaysmummy]

Hmmmm yeah I see what you mean.

I spoke to a man at the income tax office and he said it sounds as though he is self employed even though he uses an umbrella company.

I've sent the form off now with his income from 11/12 and added a note seperately that he is now classed as self employed but an umbrella company sorts his tax and n.i and given the payroll number that they use.

I've put my phone number down so hopefully they will call me if I've done something wrong.

I got confused because he's not registered as self employed with hmrc and like you say he doesn't do his own taxes but pays another company to do it.

He has to be awkward!!!

 

[Jaysmummy]

He's not actually employed by the umbrella company though is he? His wages go through them they don't actually pay him anything, he pays them an admin fee each week for taking his tax and n.i so he doesn't have to do it

 

[My_First]

If he has a payroll number, they pay his tax and ni them he is employed by the umbrella company, and as such has the same rights as a permenant employee sick pay etc.

 

[Jaysmummy]

I know he's not entitled to holiday pay. He's had a few days off and not been paid for them.

Hopefully I've filled it out right.

 

[My_First]

I know he's not entitled to holiday pay. He's had a few days off and not been paid for them.

Hopefully I've filled it out right.

He is entitled to holiday pay, but what umbrella companies do is do what's called 'rolled up' pay which means they hold back a small amount each month, which you can either take as a lump sum at the end if the contract or get paid when you take holiday.

Here's a good link: https://www.nasaconsulting.com/umbrella-company/a-guide-to-umbrella-companies.aspx


Heck, if its filled out wrong they will only ask you to resubmit.

Good luck.

 

[_Vicky_]

He is a director of the umbrella company - if it's the same as a few years ago its basically a way of paying less tax - the agency pay the ltd company (umbrella company) so they avoid NI and then the people running the umbrella company take a cut. Part of the deal when my agency did it was that all the candidates paperwork was done by them.

Your oh really needs to get on top of it as he may have to complete self assessments etc etc

 

[Jaysmummy]

No that's not the same. He pays normal tax and 2 lots of N.I so it's not like he's paying less of anything.

X

 

[Jaysmummy]

My first, I think you were right. I've just done a bit of research online and it seems he's technically "employed" by the umbrella company.

Think I might give the tax credits office a ring Monday morning!

 

[My_First]

My first, I think you were right. I've just done a bit of research online and it seems he's technically "employed" by the umbrella company.

Think I might give the tax credits office a ring Monday morning!

Hun look on teh link I posted on page one, it explains it all there. Good luck!