Frequently Asked Questions
What is an Umbrella company?
Why do I need an Umbrella Company?
Is an Umbrella Company the only option I have? What are the alternatives
to an Umbrella Company?
What are the benefits of working with an Umbrella Company?
Am I insured when working for 1st Contact Umbrella?
How do I join?
How long does the process take?
Will I be charged if I don’t work?
I don’t have a current P45, what should I do?
Does my agency use 1st Contact Umbrella?
Can I work through different agencies?
What do I do if I start to work through a new agency?
My recruitment agency has sent me a contract. Do I need to sign it?
My contract is being extended, what happens now?
Does it matter how long I work for the same client?
How and when do I submit my timesheets?
Who do I send my timesheets to?
Why can’t I submit my timesheets online?
I have a new rate – how do I add this online?
Can I claim expenses?
Can I claim my relocation costs?
Do I have to keep my receipts?
What is the difference between Re-imbursable and Claimable expenses?
How and when do I submit my expenses?
Once I have submitted my timesheets and expenses, when will I be paid?
What is the difference between a Cumulative Tax Code, Week 1/Month 1 Tax
Code and BR Tax Code?
When are my payslips issued?
Why does my take-home pay differ each week?
Why is the rate on my payslip lower than what I have invoiced?
Why have you not taken all my expenses into account when you processed
my last pay?
Why are expenses on both sides of the payslips?
How is my taxable and net pay calculated?
How is PAYE calculated?
How do you calculate holiday pay?
How do I claim for holiday or sick pay?
What is National Insurance?
Who pays National Insurance?
How is Employers National Insurance calculated?
How is Employees National Insurance calculated?
What is NI uplift?
I don’t understand my payslip. Can you explain it to me?
Will I have to submit a Self-Assessment Tax Return at the end of the financial
year?
What about my VAT, PAYE and NI liabilities?
Do you have a referral scheme in place?
What if I have more questions?
What is an Umbrella company?
An Umbrella company offers contractors most of the benefits of being a limited company
without all the responsibilities and cost of the financial management. We act as
the Employer to independent contractors who are working under a temporary contract,
usually through a specialist employment agency. It means that contractors can be
legally tax efficient and not be concerned with all the implications of
IR35.
Why do I need an Umbrella Company?
Recruitment agencies prefer to issue contracts to Limited Companies and not to run
payroll themselves. So in order to carry out your contract and get paid, you would
be advised to be an employee of an Umbrella Company.
Is an Umbrella Company the only option I have? What
are the alternatives to an Umbrella Company?
The other option is to set up and become a Director of your own Limited Company.
These services can be provided by 1st Contact Accounting.
In our experience we have found that if you are new to contracting or are less inclined
to manage the administration of your own Limited Company, then an Umbrella Company
is the best starting point for you.
What are the benefits of working with an Umbrella Company?
Being employed via an umbrella company allows you to reduce your taxable income
by claiming work related expenses.
It is also less administration-intensive than when you’re the director of your own
limited company. Read more about the benefits
of an Umbrella company.
Am I insured when working for 1st Contact Umbrella?
If you are a 1st Contact Umbrella employee you are automatically covered for the
Professional Indemnity, Employers Liability and Public Liability. The geographical
limits for the insurance are Great Britain, Northern Ireland, Isle of Man, Jersey,
Guernsey and Alderney. Please contact us for more
information regarding the extent of the insurance cover.
How do I join?
To begin with we suggest that you speak with one of our New Business Consultants.
The consultant will talk through your specific details in relation to your employment
history, as well as the current assignment you are working on or are about to take
up. This consultation will provide you with the benefits of working through an Umbrella
Company and what salary you can expect. Once you have had this consultation you
can register by completing the online registration form. Register
Now.
How long does the process take?
Once you have completed the online registration form a New Business Consultant will
be in contact to confirm receipt and follow up on any missing documents. Once you
have provided us with the required documents (Passport copy/Visa and P45/P46) we’ll
add you to our system and send you a welcome email. We aim to have this completed
within 24 hours once we’ve received everything we require.
Will I be charged if I don’t work?
No, 1st Contact Umbrella only charges for every timesheet
that is processed through our payroll.
I don’t have a current P45, what should I do?
If you do not have a current P45, please let us know and we can send you a P46 form.
If you are waiting on your P45 from your previous employer you don’t have to complete
P46. If you require a P46 you can download
it here.
Does my agency use 1st Contact Umbrella?
One of our New Business consultants can easily confirm this for you and if your
agency is not currently on our list of partners we will introduce ourselves to them.
Once everything is in place we will inform you on the way forward.
Can I work through different agencies?
Yes, you are able to work through any number of agencies and you can change or add
agencies at any time. If, for example, your contract ends and you get a new assignment
through a new agency, you can continue to work through 1st Contact Umbrella. Your
payment structure and time might vary from one agency to the next.
What do I do if I start to work through a new agency?
If you start working with a new agency/client you are required to email or fax us
notification of this. We will then advise you of the info we require. One of the
payroll consultants will update the system and you will be able to submit your timesheet
online for the new contract.
My recruitment agency has sent me a contract. Do I
need to sign it?
No. The contract will be between 1st Contact Umbrella and your recruitment agency.
The contract should only be signed by a Consultant or Manager at 1st Contact Umbrella.
If you need to sign anything your agency will advise you of this.
My contract is being extended, what happens now?
Once we receive written confirmation regarding contract extension from yourself
or the agency we will update our system accordingly. If a contract is issued by
the agency we’ll sign it on behalf of the contractor and company.
Does it matter how long I work for the same client?
There are no rules governing how many assignments you may carry out for the same
client, provided you meet the HMRC temporary work place rules. There is legislation
in place which governs how long you can be at any one temporary workplace and claim
business expenses. This is commonly known as the “24 month rule”. This rule states
that the cost of travel from your home to your client site address (temporary workplace)
is only allowable as a business expense for as long as you believe your contract
will not exceed 24 months working at the same location. Once you have an assignment
at a new location the 24 month limit of Temporary Work place Rules will start again
and enable you to claim these types of business expenses.
How and when do I submit my timesheets?
Once the registration process is complete, you will receive a welcome email from
a 1st Contact Umbrella Payroll Consultant, which will include your login details
for our online portal. You will need to login online using the same submission cycle
as discussed with your recruitment agency. Depending on the agency, this could be
weekly or by calendar month.
You will need to find out from your agency whether they will require an additional
timesheet to be submitted. (Some agencies are self-billing which means they pay
from the timesheet submitted with them and not our invoice, some require both and
others just use our invoice).
The 1st Contact Umbrella invoice is generated using the information submitted online
with us and emailed to your agency with the contact details provided.
Who do I send my timesheets to?
You’ll need to login each week and submit your timesheet details so that we can
invoice your agency/client on your behalf. Please note that timesheets must be submitted
no later than Tuesday morning for the prior week’s work.
If your payment structure is monthly, timesheets will need to be submitted online
at the end of each month.
Why can’t I submit my timesheets online?
If we haven’t received your placement details you will not be able to submit timesheets
online. Please notify us of these as soon as you’ve received them or if the current
placement details we have on file for you change.
Also, if you are trying to create a timesheet for a period that has already been
accounted for or if the start/end dates are incorrect you will not be able to create
a timesheet online either.
I have a new rate – how do I add this online?
If your rate is incorrect or you have a new rate, please notify us via email so
that we can update this for you. It’s important that you refrain
from submitting your timesheet until we’ve confirmed that your
rate has been updated.
Can I claim expenses?
This will be discussed in more detail when you speak to one of our New Business
Consultants. Provided you are a contractor, you can make use of 1st Contact Umbrella’s
extensive
expense claim policy based on the HMRC regulations. If you registered with
1st Contact prior to your arrival in the UK you are eligible to
claim relocation costs.
All expenses claimed must be wholly and exclusively for business purposes. These
include travel and subsistence, computers and stationary.
Can I claim my relocation costs?
If you register with 1st Contact Umbrella before you leave
your home country and we are your first employer in the UK, you can claim your relocation
costs as part of your expenses. This includes flights, six weeks temporary accommodation
and any moving/shipping costs, you can claim up to the amount of £ 8000 in
relocation costs. If you require more information regarding this please
contact us.
Do I have to keep my receipts?
You are required to keep invoices/receipts for all expenses that you claim. Should
HM Revenue & Customs enquire about your expenses, you should be able to substantiate
the expenses with these invoices/receipts. 1st Contact
does not require that you send in these receipts. 1st Contact
may review expenses from time to time where receipts will be requested so make sure
you keep them in a safe place.
What is the difference between Reimbursable and Claimable
expenses?
Claimable expenses are expenses that are wholly and exclusively business related
and are claimed via the umbrella company – they are not paid back to you. By submitting
a Claimable expense you are effectively reducing your taxable earnings and therefore
reducing the amount of PAYE and NI due. This is one of the benefits of being paid
via an umbrella company.
Reimbursable expenses are expenses that you have incurred and that your agency/client
agrees to refund back to you. Reimbursable expenses are non-taxable.
How and when do I submit my expenses?
The 1st Contact Umbrella expense policy and claim forms
will be sent to you in your welcome email. You will need to submit an expense claim
form either by fax or email. It is important that you submit any expense claim forms
at the same time you submit your timesheets online.
Once I have submitted my timesheets and expenses,
when will I be paid?
At 1st Contact, we process payroll twice a week. Once payment has been received
from your agency/client, it will be processed on the next available payroll. We
have a detailed document regarding our
payment cycle and
payment process to help explain these procedures to you.
What is the difference between a Cumulative Tax Code,
Week 1/Month 1 Tax Code and BR Tax Code?
The tax code you are on will depend on whether you provide us with a P45 or a P46.
The Cumulative tax code allows you to be more flexible as the tax free allowance
can accrue if you don’t use it. Often, if you start late in the tax year, your first
few payments usually have little or no tax deducted.
On a Week 1/Month 1 tax code, you still receive a tax free allowance, however if
you do not work for a certain period the tax free allowance will not carry over
and you lose it. You are usually put on a week 1/month 1 tax code if you have not
provided your new employer with your previous P45.
If you do not provide us with a P45 or P46 when you register, you will be allocated
a BR (Basic Rate) tax code until you provide us with your tax documents. On a BR
code you receive no tax free allowance and will therefore pay a higher amount of
tax.
Your tax code determines the amount of tax free allowance that you have for that
year. If your tax code is, for example, 747L this means that you have a tax free
allowance of £7,475.
Here is a link to the explanation on the HMRC website
When are my payslips issued?
If your payment structure is weekly, your payslip will be loaded online every Friday
afternoon once our payroll has been completed. If your payment structure is monthly,
you will only be able to view your payslip online at the end of each month.
If you have a query regarding your payslip you can contact a 1st Contact
Umbrella Consultant on 0207 759 7535 of
umbrellaops@1stcontact.com
Why does my take-home pay differ each week?
Your take home pay could differ if your hours worked or expense claim submissions
aren’t consistent each week. It also depends on your whether your tax code is cumulative
and if you have accrued any tax free allowance from previous periods.
Why is the rate on my payslip lower than what I have
invoiced?
The reason for this is that our system populates your payslips by taking the basic
pay amount and dividing it by the days/hours you worked. If you would like to confirm
your rate, just add your basic pay and holiday pay and then divide this by the days
or hours worked.
Why have you not taken all my expenses into account
when you processed my last pay?
In any payment we make to you, we will always process as many of your expenses as
we can. However, we must ensure compliance with the National Minimum Wage requirements.
Any expenses that are not used against your pay will be automatically carried over
and applied in your next pay. If we do not receive your expenses on time (Tuesday
close of business the week after you worked) they will not be processed with your
payment and will be used in the next payment processed for you.
Why are expenses on both sides of the payslips?
By submitting an expense you are effectively reducing your taxable earnings and
therefore reducing the amount of PAYE and NI paid. Your claimable expense shows
as a deduction because we remove the expense amount from your pay prior to calculating
your tax– this is the main benefit of using an Umbrella company; expenses reduce
your taxable income. Your expenses show up on the other side as a claimable expense
because it is then added back onto your pay after the tax has been calculated.
The calculation for this is as follows:
Employee take home pay = (Basic pay + Holiday Pay) – (Deductions) + (Expense Amount)
How is my taxable and net pay calculated?
The breakdown of your payslip can be seen as follows:
TAXABLE PAY:
The Taxable Pay is the figure that we use to calculate your PAYE and NI. It differs
from your gross pay and is calculated as follows:
Taxable Pay = (Basic Pay + Holiday Pay) - (Deductible Expenses) - (NIER) - (Admin
fee)
NET PAY:
Your Net pay is the amount you’re due to be paid and is calculated as follows:
Employee take home pay = (Basic Pay + Holiday Pay) - (PAYE and NIEE and NIER) -
(Admin Fee)
How is PAYE calculated?
WEEKLY:
The tax code for the current financial year is 747L cumulative. This means that
£7475.00 of your PAYE contributions are tax free and our system calculates
this on a weekly basis for you. PAYE is calculated using 3 main thresholds, on a
weekly basis the first £124.61 is tax free, the next £720.00 is calculated
at 20% and from there on its calculated at 40% (up until £150 000.00 annually).
MONTHLY:
The tax code for the current financial year is 747L cumulative. This means that
£7475.00 of your PAYE contributions are tax free and our system calculates
this on a monthly basis for you. PAYE is calculated using 3 main thresholds, on
a monthly basis the first £539.92 is tax free, the next £3117.00 is calculated
at 20% and from there on its calculated at 40% (up until £150 000.00 annually).
PAYE is calculated on the taxable pay and the above calculations are based on the
747L cumulative tax code only. On a Basic Rate tax code, there is no tax free allowance
and PAYE is calculated at a flat rate of 20%.
How do you calculate holiday pay?
It's a statutory requirement that holiday pay is shown on your payslip and this
is calculated at 10.77% of your gross amount (basic pay + holiday pay). As a contractor
this is generally included in your rate and therefore not accrued.
How do I claim for holiday or sick pay?
Holiday Pay:
As a contractor you do not receive holiday pay. However, it is an HMRC requirement
to show holiday pay on our payslips, so we split your gross pay into basic pay and
holiday pay, we do not accrue the holiday pay though, it is paid out to you with
each payment.
Sick Pay:
With regards to sick pay, you are entitled to claim after your 3rd consecutive day
of absence and we require a doctor’s certificate or self certificate. The first
3 days are referred to as waiting days which means that if you are sick for 5 consecutive
days, for example, the first 3 won't be paid for but the following 2 will be.
What is National Insurance?
You pay National Insurance contributions to build up your entitlement to certain
social security benefits, including the State Pension. The type and level of National
Insurance contributions you pay depends on how much you earn and whether you're
employed or self employed. You stop paying National Insurance contributions in the
year you reach State Pension age.
Who pays National Insurance?
You pay National Insurance contributions if you are an employee or self-employed
and you are aged 16 and over, providing your earnings are more than a certain level.
You stop paying National Insurance contributions at State Retirement age. This is
currently 65 for men and 60 for women but will gradually increase to 65 for women
over the period 2010 to 2020.
How is Employers National Insurance calculated?
Employers NI is calculated at 13.8% of your taxable pay and includes a weekly tax
free allowance of £136.00. If your payment structure is monthly, the tax free
allowance would then be £817.00.
How is Employees NI calculated?
Employees’ NI is also calculated according to your taxable pay. There is a tax free
allowance of £139.00 per week or £602.00 per month and these are then
followed by the 12% threshold and the 2% threshold. Breakdowns of these brackets
are as follows:
|
Weekly
|
|
|
Monthly
|
|
|
|
|
|
|
|
£0.00 - £139.00
|
0%
|
|
|
£0.00 - £602.00
|
0%
|
|
£139.01 - £817.00
|
12%
|
|
|
£602.01 - £3540.00
|
12%
|
|
£817.01 Plus
|
2%
|
|
|
£3540.01 Plus
|
2%
|
What is a NI uplift?
The NI Uplift (National Insurance Uplift) is something that some agencies/employers
will agree to pay contractors who are being paid via an Umbrella Company as opposed
to being paid PAYE. When you work through an Umbrella Company, your agency/client
will not have to make Employer’s National Insurance contributions to HM Revenue
and Customs on your behalf.
Thus your agency/client is effectively saving money by not needing to make this
payment, some agencies may be willing to pass this benefit on to you. The NI Uplift
can range from 0% up to 13.8%.
For example:
If your rate is £10 per hour and your agency/client decide to pass on the benefit
to you, your hourly rate would be £11.38 per hour if you are paid through an
Umbrella company.
Please note that this benefit is given at the discretion of each agency/client and
will need to be discussed with them.
I don’t understand my payslip. Can you explain it
to me?
Yes, to course! Call one of our 1st Contact Payroll Consultants
on 0207 759 7535 anytime between 9 am – 5 pm. We will be happy to assist you with
any questions you may have.
Will I have to submit a Self-Assessment Tax Return
at the end of the financial year?
As a PAYE employee you may not be required to complete a Self-Assessment tax return.
Please check the HMRC website here
for this information. Where a tax return is required
1st Contact Accounting can assist you in this regard.
You might even be due a Tax Refund for previous tax years which
1st Contact Tax Refundscan assist with.
What about my VAT, PAYE and NI liabilities?
With 1st Contact Umbrella you do not need to worry about
any of these government regulations. We take care of all your VAT, PAYE and NI liabilities.
PAYE and NI are deducted and paid to the Inland Revenue by us.
Do you have a referral scheme in place?
If you refer a friend
and the referral is successful you receive £50*.
*Terms and Conditions do apply.
What if I have more questions?
If you still have any unanswered questions please
contact us.