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HSMP Extension

Archived UK Tier 1 (General) points system forum. This route no longer exists.

Moderators: Casa, push, JAJ, ca.funke, Amber, zimba, vinny, Obie, EUsmileWEallsmile, batleykhan, meself2, geriatrix, John, ChetanOjha, archigabe, Administrator

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krssubbu
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HSMP Extension

Post by krssubbu » Thu Jun 26, 2008 7:31 am

Hello Guyz,

I need your help here.

I am on the HSMP scheme and my visa extension is due in Jan 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 £1600 per month (Total hours worked X hourly rate)

My Gross Value is £1300 (after deducting Employers NI and Umbrella Company charges - Not taxable). So i am actually paying tax on £1300.


I had mailed HSMP team many times but they seem to copy and paste what is there on the guidance, which really is not clear for contractors.

Could you please help me out here?

Thanks

Subbu

republique
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Re: HSMP Extension

Post by republique » Thu Jun 26, 2008 10:24 am

krssubbu wrote:Hello Guyz,

I need your help here.

I am on the HSMP scheme and my visa extension is due in Jan 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 £1600 per month (Total hours worked X hourly rate)

My Gross Value is £1300 (after deducting Employers NI and Umbrella Company charges - Not taxable). So i am actually paying tax on £1300.


I had mailed HSMP team many times but they seem to copy and paste what is there on the guidance, which really is not clear for contractors.

Could you please help me out here?

Thanks

Subbu
so what is your question?

krssubbu
Senior Member
Posts: 686
Joined: Tue Dec 12, 2006 12:37 am

Post by krssubbu » Thu Jun 26, 2008 10:38 am

Sorry i think i had forgotten to mention what my question was

My Question is will the the HSMP team consider the invoice value or will they consider the Gross Value

justice_will_reign
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Post by justice_will_reign » Thu Jun 26, 2008 11:29 am

krssubbu wrote:Sorry i think i had forgotten to mention what my question was

My Question is will the the HSMP team consider the invoice value or will they consider the Gross Value
From similar cases on other forum, they will consider your total income including any other benefits before tax in as much you can proof those and it shows on your invoice or statement of account or something to show for it. Personal opinion!

Sushil-ACCA
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Post by Sushil-ACCA » Thu Jun 26, 2008 2:13 pm

U R suppose to pay

(1600-435)*11%*12 + Employee cont NI

(1600-435)*12.8*12 EMPLY NI

+ TAX

OTHERWISE ?

krssubbu
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Post by krssubbu » Thu Jun 26, 2008 2:16 pm

sorry sushili i didnt get your question

krssubbu
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Joined: Tue Dec 12, 2006 12:37 am

Post by krssubbu » Thu Jun 26, 2008 2:25 pm

say my total invoice value is £1700

after the umbrella company charges and employers NI

1700 - (100 (umbrella company charges) + 12.8%)

say if this figure is roughly around £ 400 then remaining 1300

So the Gross is £1300 (taxable pay) on which the normal 22 % + emp NI% is calculated.

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, these problems

So could you please tell me if they will take the Invoice value or Gross Value

WoodieG
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Post by WoodieG » Thu Jun 26, 2008 4:32 pm

Gross, the other money was never paid to you so was never your income.
________
Maryjane
Last edited by WoodieG on Tue Mar 08, 2011 5:06 pm, edited 1 time in total.

MrBaboo
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Post by MrBaboo » Thu Jun 26, 2008 4:58 pm

I think WoodieG is right. Assuming you are merely an employee of your umbrella company (you have an employment contract etc), you can only claim the gross amount after employers NIC, umbrella fees and any other untaxed expenses have been subtracted from your invoice amounts.

krssubbu
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Post by krssubbu » Fri Jun 27, 2008 7:20 am

Thanks for your reply woodie G and Mr Baboo.

But my actual hours are the value mentioned on the Invoice value. The amount on the Invoce value is the actual amount it should have been taxed if i was a normal employee (not a contract employee). So dont you think i can go with the invoice value or is it the other way round.

One more thing my payslips is split into the following feilds

Basic Pay, Holiday Pay and commission (all taxable).

So i want to know if the HSMP team will consider Holiday Pay and Commission.

Thanks

MrBaboo
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Post by MrBaboo » Fri Jun 27, 2008 8:06 am

krssubbu wrote: But my actual hours are the value mentioned on the Invoice value. The amount on the Invoce value is the actual amount it should have been taxed if i was a normal employee (not a contract employee). So dont you think i can go with the invoice value or is it the other way round.
Ultimately you never received the full invoice amount as your umbrella company took a fair chunk of it - some to pay employers NIC, some for their own income. These amounts were never in your posession and you never paid any tax on them - hence they are not part of your income.

Your situation is similar to an executive who secures multi-million dollar contracts for his company and gets a bonus based on how much business he brings in. You could not expect UKBA to consider the multi-million dollar contract as part of his income, only the bonus he was paid by the company.

You say you have payslips - well the gross value on your payslips is your best guide to what you will be able to claim.
krssubbu wrote: So i want to know if the HSMP team will consider Holiday Pay and Commission.
As long as your commission was taxed it should be accepted. I don't know about holiday pay and defer to other more experienced forum members...

krssubbu
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Post by krssubbu » Fri Jun 27, 2008 8:15 am

Thanks a lot Mr Baboo for your valued feeddback. appreciate it

Also, My Payslips does not say Gross Pay but mentions Taxable Pay. (Is this what is meant by Gross Pay)

Other members, could you please throw some light on the Holiday Pay. (It is also taxed)

karupalli
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bonus

Post by karupalli » Fri Jul 04, 2008 1:15 pm

I know that they consider bonus.. but Holiday pay... not sure... Best thing is to ask them...

Rememebr that they dont care how much invoice you are doing .. that contract is between your umbrella company and your client. What matters is how much salary is paid to you (not expenses)...

indian234
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gross pay

Post by indian234 » Mon Jul 07, 2008 7:55 pm

I have question regarding gross pay.

I am a contractor and working through umbrella company.....Now, i have learnt from previous posts that expenses are not part of gross pay.

But, i am receiving payslip from my umbrella company which has categorised pay as salary, bonus, expenses and accomodation. Salary and Bonus are taxable.

Now, there are other fields like "total gross pay till date". "gross pay this month" , etc. In that gross pay showed expenses and accomodation as well.

I believe this payslip is generated using the software issued by HMRC. Now, can any one clarify whether the expenses are part of gross pay or not?

I will be going for extension in march and so this is really important for me.....please give me some insight into this...

geriatrix
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Re: gross pay

Post by geriatrix » Mon Jul 07, 2008 8:05 pm

indian234 wrote:Now, i have learnt from previous posts that expenses are not part of gross pay..
Tier 1 policy guidance ver. 06/08 wrote:107. Unearned sources of income that we will not consider as previous earnings include:
• expenses (such as accommodation, schooling or car allowances) that reimburse the applicant for money he/she has previously spent;
• dividends, unless paid by a company in which the applicant is active in the day-to-day management, or unless the applicant receives the dividend as part or all of his/her remuneration package;
• income from property rental, unless this forms part of the applicant’s business;
• interest on savings and investments;
• funds that were inherited;
• money paid to the applicant as a pension;
• expenses where the payment reimburses the applicant for money he/she has previously spent;
• statutory redundancy payment;
• sponsorship for periods of study; or
• state benefits.
Life isn't fair, but you can be!

indian234
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Location: UK

thank you

Post by indian234 » Mon Jul 07, 2008 8:48 pm

Thank you Sushdmehta......that was fair enough for planning my extension.

But,i feel something is not right either in the way payslip had generated or the way that home office guidance is showing .

So, now even though my gross salary on payslip shows £X, previous earnings when i go for extension will be £(X- expenses). This is what i am thinking about. Any way, i am going to plan as per the guidance notes.

Thank you once again......

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