What is Umbrella Company?
An umbrella company is itself a limited company, administered by a service provider. It is a ready-made solution available to a large number of unconnected contractors. In order to be tax compliant, the contractor must be an employee of the umbrella company and have all remuneration paid out in the form of employment income. In practice the contractor is usually paid via a combination of salary, ‚Äúbonus‚ÄĚ and tax free expenses of employment.
The umbrella company normally issues invoices on the contractor’s behalf, collects payments from clients/agencies, calculates tax and NI contributions and pays the contractor their net pay direct to their personal bank account.
In order to be tax compliant, the contractor must be an employee of the umbrella company and have all remuneration paid out in the form of employment income. In practice the contractor is usually paid via a combination of salary, “bonus” and tax free expenses.
The umbrella is the most favoured option for contractors falling within IR35, those not expecting to be contracting in the longer term and those who want the “simplest life”.
How do I get started?
Our registration process is very simple and can be done electronically, or by telephone. We require the following information, either by fax, post or scanned and attached to an email:
- A completed Application form (can be downloaded)
- A copy of the photo pages of your passport or your photo driver‚Äôs licence
- A copy of a valid work visa/permit (if applicable)
- A P45 from your last employer or a P46
We will contact your agency or client and request that your contract. Please note that a copy of the contract will be sent to you for review before we sign it on your behalf.
You will then receive a Contract of Employment with Amity, which you will need to sign and return.
How to submit timesheets and expenses ?
It is important to record time spent on assignments on the timesheets according to your contract with agency or client. Expense claims which are chargeable to your agency or client are usually completed following their own processes. You can either do the timesheet or expense via our web portal or using the Agency/Client process.
It is your responsibility to ensure that your timesheets and expense claims are approved and submitted according to the processes outlined in your contract.
Expense claims that are not chargeable to the agency or client are to be submitted by completing Amity Umbrella Employee Expense form, please follow our Expenses Policy.
Please forward copies of all timesheets and expense claims by email or fax to us at:
Email: [email protected] / Fax:¬†0208 952 9980
Do I send P45 or P46?
If you have a P45 from the last job please forward it. If you not have a P45, please ask us and we will send you P46. The HMRC will then advise us of your correct tax code.
How do I prove my earnings if I want to apply for a mortgage?
We can provide you with the necessary documentation in this respect and indeed put you in touch with specialists who facilitate mortgages for contractors.
What does ‚Äúself billing‚ÄĚ mean?
Some agencies are described as being self billing. This is an arrangement between the agency or client in which they prepare the invoice and forward a copy to the Umbrella Company.
This means that as you enter your timesheet, the agency or client raises their own invoice to be billed each time a payment is made. The main benefit of self billing is the removal of the requirement to supply invoices, therefore resulting in a more efficient payment process.
What happens when the current contract is terminated?
Please inform us when this happens. You can continue to use our Umbrella Service when you change contracts or restart after a break. There is no termination fee.
What do I do if I wish to move to a permanent job?
Once you have informed us that you are leaving, we will collect all outstanding funds and make a final payment to your bank account. We will immediately issue your P45 so you can give it to your new employer.
Can I work on more than one contract at the same time?
Yes, you can work on multiple contracts at the same time at no additional cost.
How Payslips & Payment Processing is done?
On the same day we process your payment, a payslip will be emailed to you. This will show the net figure being transferred to your bank account as well as the deductions made for PAYE, National insurance and our fees. The expenses processed will also be shown on the payslip.
What tax do I pay?
As a contractor you will incur Tax, Employees and Employers National Insurance. With Amity Solutions, we will take care of all your Tax and NI liabilities on your behalf.
Do you have a HMRC Dispensation?
Yes, however, having an expense dispensation from HMRC does not mean that an umbrella company is an can claim expenses without keeping receipts ‚Äď contrary to some umbrella companies‚Äô claims.
HMRC states that¬†‚Äėexpenses must be incurred wholly, exclusively and necessarily in the performance of your duties‚Äô. We take your tax very seriously and we don‚Äôt want you to get on the wrong side of HMRC or become liable for extra tax.
You as the individual claiming the expense will need to keep receipts or you face the possibility of being fined and penalised if your expense claim is challenged by HMRC.
Do I need to keep receipts?
Yes, it is very important that you keep receipts for any expenses that you claim, including fuel receipts for mileage and for any subsistence during the day. If we do not have copies of your receipts we will be unable to process the expenses. If you are found to have claimed expenses that don‚Äôt have a corresponding receipt, you will be penalised by HMRC for doing so and will have to repay your tax underpayment, as well as any additional penalties HMRC may impose.
Is there a limit to what I can claim each week?
No, however, it is best not to pile up receipts but put in your claims regularly. Unfortunately we cannot carry outstanding expenses from one tax year to the next tax year.
What insurance does Amity Umbrella provide?
We have a comprehensive range of insurance in place to protect you and the business, including:
- Employer‚Äôs Liability insurance up to ¬£10,000,000
- Public Liability insurance up to ¬£5,000,000
- Professional Indemnity insurance up to ¬£1,000,000
Will I get affected by IR35?
No, all contractors using an umbrella company service are deemed to be working within IR35 and as such you will not fall under IR35 rules. You will be paid via PAYE only and will not receive dividends in any form.
Can I make money by referring colleagues or friends?
Yes, we operate a referral reward scheme to anyone who makes a recommendation of a colleague or friend who joins us. Please contact us for further details.
Do you provide reference letters for financial institutions?
Yes, we will provide reference letters to financial institutions for a small fee
How and when do I receive my money?
You can be paid weekly, two-weekly or four-weekly (dependent on your agency).
We complete the calculations and send the¬†money due to you electronically the same day¬†so that you can access the money in your¬†account by close of business on the Friday.
How much does it cost me?
¬£18 per week.
Do I have to complete a self-assessment tax return?
HMRC may require you to complete a Self¬†Assessment at the end of the tax year. All the¬†information relating to your Amity is on the documents we send you, but if you¬†need help we offer a service to prepare the¬†Return for you that you just then need to check,¬†sign and send to HMRC.
There is an additional¬†charge for this service and it is only available to¬†you if you have been in PAYE employment¬†exclusively through Amity. Please contact our Operations Team on 02089528989 for more¬†information.