Working as CONTRACTOR in London....previous earnings issue

jinnyjonny · Post by **jinnyjonny** » Sun Jun 14, 2009 1:35 am

Hi,

I came to UK on HSMP last year and worked as Contractor through a umbrella company for 10 months. For extending my visa under tier 1, i have earned to score enough points. However , I noticed on my payslips that umbrella company has depicted earnings in such a way that my gross earning is reduced by 1/3rd as a consuquence.
For eg: Per day charge 200 GBp * 20 days = 4000 GBP gross
Business exp: 1000 GBP

Umbrella company payslip shows

Invoicing amt: 4000 GBP
Earnings:
Basic pay 2000
holiday pay - 1000

Deductions:
tax: 350
Employers NI: 320
Employee NI 350

Net pay: 1980

I myself fail to understand what is my gross according to such a payslip and why they dont show business expense as part of my gross.

I have asked them to re-format payslip but they REFUSED to do so.

Please advice.

Regards,

jinnyjonny · Post by **jinnyjonny** » Sun Jun 14, 2009 3:06 am

I think i have not put up my question correctly above:

I am on the HSMP scheme and my visa extension is due in July 2009.

I work as a contractor and get paid hourly. As a contractor i am going though an umbrella company thus making me an employee of that company. They do my billing for me. Contractors have to pay Employers NI and umbrella company charges which are not taxable.

My question is, my Invoice value is Â£1700 per month (Total hours worked X hourly rate)

Earnings : Â£1300 (after deducting Employers NI and Umbrella Company charges - Not taxable). So i am actually paying tax on Â£1300.

But actually i have earned 1700 which is hourly rate X total number of hrs

because i am a contractor and i have to pay 2 NI out of which 1 NI is not taxed and umbrella company charges are not taxed, So could you please tell me Home Office would consider 1300 GBP as my gross or 1700 GBP?

Please advice.

indian234 · Post by **indian234** » Sun Jun 14, 2009 10:08 am

Your gross will be Â£1300 and not Â£1700 as far as i know.

So, better submit application based on that. Also, to be clear, there should be a column on payslip saying Total Gross till date? Please have a look at it as i guess it is that the caseworker looks for.

regards,

MyHSMPApplication · Post by **MyHSMPApplication** » Sun Jun 14, 2009 10:12 am

Hi,
Indian 234 is absolutely correct. Your gross is 1300 GBP. This for me is one of the problems of going through an umbrella company. Their charges are never considered. It is always better to set-up a limited company and bill your clients.

All the best.

Cheers
PG

Post by **ChetanOjha** » Sun Jun 14, 2009 10:43 am

If you payslips doesn't contain GROSS TODATE, you can get letter from your umbrella company stating Gross/Net figure for each month.Probably some people prefer to get themself paid some extra bonuses etc to boost their Gross figures.

I agree with another member who said it is best to run your own billing company. It doesn't cost much and on top of it the process is hassle free. The amount you pay to umbrella company(as their charges) can be used to hire a good accountants. One of the best accountant in London charges on 150/- per month so you can do the math.

jinnyjonny · Post by **jinnyjonny** » Sun Jun 14, 2009 12:58 pm

Thanks all for your valuable feedback.
However, please also tell me the business expenses claimed as contractor which are also on payslips, will that be considered as part of gross or not?

Regards,

Post by **ChetanOjha** » Sun Jun 14, 2009 2:07 pm

If you are paying from your personal credit card and claiming reimbursment from your company, you can include the same in your payslips and hence gross.

jinnyjonny wrote:Thanks all for your valuable feedback.
However, please also tell me the business expenses claimed as contractor which are also on payslips, will that be considered as part of gross or not?

Regards,

jinnyjonny · Post by **jinnyjonny** » Sun Jun 14, 2009 10:14 pm

Yes, I paid with my own card however claim is something of this sort say,

if my invoicing amt was 2000 ( 100 GBP * 20 days)
and my expenses ( acco rent, travel, food ) = 500

Payslip from umbrella company says 1500 as taxable income and depicts 500 as non taxable business expenses. so in this case what would be the gross?

Post by **ChetanOjha** » Sun Jun 14, 2009 10:18 pm

I would claim gross as 2000. I have had the same situation at the time of my initial HSMP. My company used to add expenses in gross amount. It was accepted.

jinnyjonny wrote:Yes, I paid with my own card however claim is something of this sort say,

if my invoicing amt was 2000 ( 100 GBP * 20 days)
and my expenses ( acco rent, travel, food ) = 500

Payslip from umbrella company says 1500 as taxable income and depicts 500 as non taxable business expenses. so in this case what would be the gross?

jinnyjonny · Post by **jinnyjonny** » Mon Jun 15, 2009 3:03 am

were ur expenses taxable? mine r not taxable.

Post by **ChetanOjha** » Mon Jun 15, 2009 9:45 am

jinnyjonny wrote:were ur expenses taxable? mine r not taxable.

I don't know as my employer used to do all stuff for me. But it looks they do consider it taxable with only difference that I have never paid tax on it. May be there are doing some tax saving stunt there which I am not aware.

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Working as CONTRACTOR in London....previous earnings issue

Working as CONTRACTOR in London....previous earnings issue