Re: Umbrella Company & NICs


"Adrian" <toomany2cvs@xxxxxxxxx> wrote in message
news:Xns97F872C88F8Fadrianachapmanfreeis@xxxxxxxxxxxxxxxxxx
Just_Started (russellwest@xxxxxxxxxx) gurgled happily, sounding much
like they were saying :

If you're employed and your employer won't let you claim legitimate
business expenses directly, then you can do them on via
self-assesment tax.

That's EXACTLY the same for an umbrella.

Almost so, but not quite. Via an umbrella you would get NI relief as
well as tax relief. Via Self Assessment you just get tax relief.

Thank you Paul. Vindication at last.

I'm not sure it goes quite that far...

You would still get the NI relief on any expenses claimed through your
employer (rather than self assessment), just as you would through your own
limited company.

Yes, logical because if you use an umbrella it is your employer. However OP
was refering to umbrella v self assessment, not umbrella v direct
employment.


Even if you're claiming it via self-assessment, if you are still above the
upper NI threshold (£650 per week) after those expenses, it's damn near
academic anyway, because you're looking at paying 1% class 1 NI on those
expenses...

No, you're missing the point here. Employees NI is 1% over UEL, but
employers NI is still 12.8% on everything. Getting the expenses through an
umbrella / employer rather than self assessment means that the expenses get
employers NI relief as well.

Its also worth noting that claiming via self assessment is OK in theory, but
in practice employment expenses must pass a test of "wholly, exclusively and
necessarily" (as distinct from wholly and exclusively for self employment).
HMRC have been known to challenge expense claims for employees on self
assessment on the "necessarily" limb - on the grounds if its necessary they
employer would have paid for it anyway.


--
Paul Garbett
Garbetts Ltd - accountants
www.garbetts.com


.

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