Contracting though an umbrella company - extension evidence

According to the guidance,

If the applicant is a contractor who does not operate either through his/her own company or as an employee, he/she may provide
an accountant’s letter confirming a breakdown of his/her gross and net earnings for the period claimed and personal bank statements clearly highlighting all credit payments made to his/her account from employment undertaken during the earnings period claimed.

I don't quite understand which amount the points will be based on - gross or net? Bank statements would be net, after a lot of deductions. My umbrella company states gross, taxable and net amounts. Taxable amount being the gross after deducting their fees and employer NI contribution. There is a lot of difference between the gross, taxable and net amounts and it will be tough if they are using the net amounts.

pyke wrote:According to the guidance,

If the applicant is a contractor who does not operate either through his/her own company or as an employee, he/she may provide
an accountant’s letter confirming a breakdown of his/her gross and net earnings for the period claimed and personal bank statements clearly highlighting all credit payments made to his/her account from employment undertaken during the earnings period claimed.

I don't quite understand which amount the points will be based on - gross or net? Bank statements would be net, after a lot of deductions. My umbrella company states gross, taxable and net amounts. Taxable amount being the gross after deducting their fees and employer NI contribution. There is a lot of difference between the gross, taxable and net amounts and it will be tough if they are using the net amounts.

Points claimed for earning are always Gross (i.e. pre-tax). As long as the Net Salary on the letter from umbrella company matches the amount on your bank statement there is no problem whatsoever.

Thank you.

pyke wrote:Thank you.

Hi there ,

Just an information about your case :

1) The net income will be expense minus i.e suppose you earn 100 pounds and make an expense of 30 pounds now your taxable income will be 100-30=70 . On 70 pounds you will pay NI . PAYE and other stuff so HOme office will see this 70 as your income . Please be careful with this trap ....

Good Luck!
Ali

pyke wrote:According to the guidance,

If the applicant is a contractor who does not operate either through his/her own company or as an employee, he/she may provide
an accountant’s letter confirming a breakdown of his/her gross and net earnings for the period claimed and personal bank statements clearly highlighting all credit payments made to his/her account from employment undertaken during the earnings period claimed.

Does this guidance apply to for those through Umbrellas? I thought all with Umbrella's , are essentially PAYE employees , so don't have to worry about statements as above ? ( except ofcourse to ensure they don't count they non taxable expenses in etc )
or I got it wrong ?

MPI wrote:Does this guidance apply to for those through Umbrellas?

That is aimed at those who operate through an umbrella company, I think.

aliq09 wrote:The net income will be expense minus i.e suppose you earn 100 pounds and make an expense of 30 pounds now your taxable income will be 100-30=70 . On 70 pounds you will pay NI . PAYE and other stuff so HOme office will see this 70 as your income . Please be careful with this trap

Thank you, Ali. That does make a difference. Can someone confirm this, please? That it is the taxable amount that NI and PAYE is based on, not the gross amount? Even if these are not expenses that are reimbursed, merely allowable expenses used to reduce the amount taxed.

That would make it really self-defeating to claim deductable expenses such as accommodation and transport in order to reduce the taxable amount, wouldn't it? It's a double-edged sword.

pyke wrote:

MPI wrote:Does this guidance apply to for those through Umbrellas?

That is aimed at those who operate through an umbrella company, I think.

aliq09 wrote:The net income will be expense minus i.e suppose you earn 100 pounds and make an expense of 30 pounds now your taxable income will be 100-30=70 . On 70 pounds you will pay NI . PAYE and other stuff so HOme office will see this 70 as your income . Please be careful with this trap

Thank you, Ali. That does make a difference. Can someone confirm this, please? That it is the taxable amount that NI and PAYE is based on, not the gross amount? Even if these are not expenses that are reimbursed, merely allowable expenses used to reduce the amount taxed.

That would make it really self-defeating to claim deductable expenses such as accommodation and transport in order to reduce the taxable amount, wouldn't it? It's a double-edged sword.

yr payslip will clearly show taxable salary and gross salary

only taxable salary will count for HO point

i am working as independent Contractor as a ERP consultant and I want to know, is it must to send invoices to HO for clients whom I worked for?.

According to Ukba guidelines " If the applicant is a contractor who does not operate either through his/her own company or as an employee, he/she may provide an accountant’s letter confirming a breakdown of his/her gross and net earnings for the period claimed and personal bank statements clearly highlighting all credit payments made to his/her account from employment undertaken during the earnings period claimed".

Is it fine If my accountant can confirm breakdown of gross and net earnings for the period claimed and personal bank statements clearly highlighting all credit payments made to my account from employment undertaken during the earnings period claimed? or I also need to send invoices? but this is not mentioned in HO guidelines