Over the last few years the use of Umbrella Companies has become more popular within the contracting market.

Umbrella Companies are popular because they take the hassle out of tax and administration responsibilities. You simply register online with your chosen Umbrella service provider. To complete your registration you will need to send in a copy of your passport and visa and your P45 or P46.

Once you are a registered client, you simply log your timesheets online and send in expense claim forms. It’s that simple. Your Umbrella Company takes care of all the administration including processing your payment after making the correct deductions and paying the correct taxes to HMRC. This leaves you free to focus on finding those opportunities and doing the work.

But how can you be sure you are entrusting your hard earned money to the right Umbrella Company?

Deon Smit, 1st Contact Umbrella Manager, offers these 10 tips for selecting the right Umbrella Company to partner with:

Experience

Only consider an Umbrella Company that has been in operation for a number of years. 1st Contact has been assisting contractors with payroll services since 1996. Be wary of any new companies as you run the risk of losing all your money to a fly-by-night operator.

Reputation

It’s all good and well if a company has been operating for years; but what if they’ve been operating badly? Scour the net for blogs and information and speak to longer established contractors about their experiences with Umbrella Companies – the good, the bad and the ugly.

Easy online system

Make sure that your Umbrella service provider has a simple online system that you can easily manage. There’s no point in using an umbrella provider to avoid admin, only to have to spend hours figuring out their complicated registration and submission systems.

Personal service

As important as an online system is, make sure that when you need to speak to a real, live person, one is available to you. 1st Contact Umbrella provides a free consultation with a professional consultant and their telephone lines are open from 8am to 5pm Monday to Friday. They also make it their business to answer all payroll related email queries within 3 working hours.

Fee structure

It is extremely important that you establish upfront that there are no joining fees and no exit fees. Ask the Umbrella Company to provide you with a full schedule of fees to ensure that you aren’t overcharged.

Insurance

What happens if your service provider goes bankrupt? Always ask about the insurance policy to be 100% sure that you will receive your money, no matter what. Your Umbrella Company should have public liability, employers’ liability, and professional indemnity insurance cover.

Expense policy

Some companies may claim an extensive claims policy, but the conditions attached are so extreme that the likelihood of you actually claiming is pretty slim. Do your research and ask as many questions as possible. Avoid any company that states that you don’t need to prove your expense claims – if HMRC does query your expenses and you cannot provide the necessary receipts, the tax liability could fall on you.

Employee benefits

Does your Umbrella Company give you the option of employee benefits such as sick leave and maternity leave? Well established companies like 1st Contact Umbrella can offer you fantastic employee benefits while you enjoy the freedom of working for yourself.

Payment dates

Does the scheme have fixed payment dates you can rely on? Be sure to find out what the payment methods and schedules are and make sure the answers are not vague. You want to know exactly what their payment policy is, so that you have recourse should the timelines not be met.

Relocation costs

Lastly, find out about other benefits. For instance, with 1st Contact Umbrella you can claim relocation costs if they are your first employer when you arrive in the UK. You could be in a position to claim the costs of your flights, shipping, 6 weeks’ accommodation. In fact, up to £8000 could be claimed to give you a tax benefit and in turn increase you net pay. Terms and conditions do apply, but this is a fantastic benefit you are not likely to see elsewhere.

We hope these tips have been of use to you. If you have any questions related to contracting in the UK, Umbrella Companies or the setting up of a Limited Company, visit www.1stcontact-umbrella.com or speak to an experienced and professional consultant by calling 0808 178 8634.

1st Contact Umbrella has successfully assisted over 100,000 clients with our no-hassle, efficient payroll service.

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Corporation tax

Small businesses (companies with profits of less than £300,000 per annum) will benefit from a reduction in the Small Profits Rate of corporation tax, decreasing from 21% to 20% as of April 2011.

The standard rate of corporation tax will also decrease to 27% from April 2011. This decrease will be followed by a 1% annual reduction every year over the next 3 years, to reach 24% by April 2014.

VAT

The standard rate of VAT is to increase to 20% from the 4th of January 2011, while sectoral rates for the Flat Rate scheme will increase at the same time. There will be no change to zero-rated and exempt items.

Capital gains tax

The annual exemption of £10,100 will remain unchanged for the foreseeable future. The tax rate for basic rate payers remains at 18%, while the rate for higher rate taxpayers increases from 18% to 28% from midnight 22 June 2010. A further change is that entrepreneurs’ relief at 10% will be extended from the first £2 million of gains to the first £5 million.

Income tax

There will be a £1,000 increase in Personal Allowance for tax to £7,475 with effect from April 2011, while the higher tax/NI rates will kick in sooner to offset the Personal Allowance increase for higher earners.

National Insurance

The increase in employers’ NI contributions will not go ahead as planned. Instead, the threshold for employers’ NI contributions will rise by £21 per week above inflation.

Small businesses in certain areas, set up over the next 3 years, will be exempt from the first £5k of employer’s NI on up to 10 employees’ wages.

For advice related to your small business’ tax issues, speak to a 1st Contact finance consultant by calling 080 8141 1657 or email info@sablewealth.com.

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Did you know?

• One in 3 people in the UK are due a tax refund!
• There is over 3 million Pounds in unclaimed tax held at the Inland Revenue office!
• You can claim overpaid tax for up to 5 years!
• 1st Contact Tax Refunds works on a “No rebate, No fee” policy!
• The average amount of tax claimed back is £850!

Is there a Substantial Sum of Money Waiting to be Claimed by You?

1. Have you paid Emergency Tax in the last 5 years?
2. Have you left the UK before the end of a tax year (6 April to 5 May)?
3. Have you had more than 1 employer in a tax year?
4. Have you worked for only part of a tax year?
5. Have you been on an incorrect Tax code at any point in the last 5 years?
6. Have you had two or more jobs concurrently?

If you answered YES to 1 or more of the above questions, there’s a good chance you are due a refund!

What Next?

Call a 1st Contact Tax Refund Consultant on 0800 856 2471 as soon as possible.

Even with our efficient service and our direct line to HMCR, it can take up to 6 weeks before you get your hands on the pounds due to you. So let’s get the ball rolling today!

Before you Call…

Here is some information which will be useful to know before you speak to a friendly and experienced 1st Contact Tax Refund Consultant:

• You will need to give exact information of the companies you have worked for in the previous 5 tax years.
• You will need to supply P60’s and P45’s from these jobs.
• If you don’t have P60’s or P45’s from your previous employers, a 1st Contact Tax Refund consultant can assist you by applying for these on your behalf.
• If these cannot be obtained, you will need to obtain a Statement of Earnings from the HR Department of the companies you worked for.
• You will need to supply us with your National Insurance number.
• If you don’t have a National Insurance number, you will have to apply for and receive your NI number before you can claim back your overpaid tax. A 1st Contact Consultant can help you with that too!

Draw up an Action Plan!

Why not put together a list of the things you need to do in order to claim back your money? Then collate all the information you need and call us on 0800 856 2471.

We’ll fill out all the necessary documentation over the phone, submit your claim to HMCR and then keep you up to date with your claim process.

Start Your Tax Refund Claim

Claim Your National Insurance Rebate

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The tax free threshold of £6,475 will no longer apply for earnings above £100,000 per annum. For most high income earners, this means missing out on thousands of pounds of tax free income that is currently protected by the zero rate income tax bracket.

An example:

£100,000 income
£6,475 personal allowance taxed at 0%
£37,400 taxed at 20% = £7,4800
£56,125 taxed at 40% = £22,450

Total tax = £29,930

£110,000 income
£0 personal allowance taxed at 0%
£37,400 taxed at 20% = £7,480
£72,600 taxed at 40% = £29,040

Total tax = £36,520

This means taxpayers are liable for £6,590 tax on the £10,000 earned over £100,000.

What can you do to avoid coughing up?

“One way to avoid this higher rate tax is to ensure you fall below the new £100,000 threshold.” says Raymond Ridgeway, Commercial Manager at 1^st Contact. “This can be achieved in numerous ways depending on your tax structure.”

If you work through a Limited Company

“As a director of a limited company, the most tax efficient option would be to draw fewer dividends from the company so that you do not exceed the tax threshold. Contributing to a UK pension fund through your limited company fund by means of a salary sacrifice means that you can also save the employers and employees NI that would otherwise be due.”

More info on Limited Companies

If you work through an Umbrella Company

“If you work through an Umbrella Company like 1^st Contact Umbrella, the most suitable solution is to claim business related expenses.” say Ridgeway. “This will enable you to reduce the amount of taxable salary and therefore your potential taxes. By asking your Umbrella Company to contribute to a pension you are also able to reduce the potential taxes and keep your tax able salary below the £100,000 tax bracket.”

More info on Umbrella Companies

1^st Contact specialises in Tax, Finance and Migration and can be contacted on 0808 141 1663 (from within the UK) or 0207 759 7510 (from outside the UK) or by visiting www.1stcontact.com

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What does “Personal Allowance” Mean?
How much income tax you pay every year is calculated by various rates set by the government. These rates are set in bands according to how much you earn per year. Quite simply, personal allowance means the amount you are permitted to earn without paying income tax.

The table below gives details of personal tax allowances for all in-date tax years. These allowances are deducted from your total taxable income before the amount of tax payable is calculated.

Tax Facts:

• 1 in 3 people are due a tax refund!
• Millions of Pounds go unclaimed every year!
• 1^st Contact has now submitted 100 000 successful claims!

If you suspect you’re due a tax refund, let 1^st Contact investigate the matter on your behalf. We have a “no refund, no pay” policy, so you have nothing to lose!

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“1^st Contact has claimed back millions for our clients and processed more than 100 000 successful tax claims! We urge people working in the UK to apply for a tax refund through the 1^st Contact website, since the average refund due is £850. We work on a “no refund, no pay” policy, so our clients really do have nothing to lose!”

“Don’t miss out on money due to you because you’re not sure if you’re eligible for a refund or not”

Are you due a tax refund?

There are many instances where people have paid more tax than was necessary. Possible reasons for this include the following:

• When the total taxable income in the tax year is less than your personal allowance;
• If you left your job before the end of the tax year and have since stopped working in the UK;
• If the company you worked for don’t have your NI number or you don’t yet have an NI number.

To check if you’re due a refund on your taxes use the 1^st Contact Tax Calculator

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What is an NI Rebate?

Very few people are aware that the government gives us a choice as to where some of our NI contributions should go. Anyone who is resident in the UK and who pays NI can opt to rebate some of their contributions.

Why Claim your NI Rebate?

Should foreigners residing in the UK decide to return home, their NI contributions will remain in the state pension where they will not be able to touch their plans until the age of 68. Even worse, this benefit is frozen and doesn’t accumulate growth with inflation i.e. over time the real value is lost.

For individuals planning to leave the UK in the future, transferring their NI contributions into their personal pensions will present far greater value. This will allow the invested money to grow as well as create increased flexibility to transfer the funds to different countries, and on the whole increase future wealth.

Claiming an NI Rebate is very straightforward. All you need do is click on the following link and follow the simple instructions on the website.

NI Rebate claim form

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1. File your Tax Return on Time

Your online tax return, plus any tax due, must be sent to HMRC by 31 January of the following year. The following steps can be followed to submit your tax return online:posted

• Visit http://www.1stcontact taxrefunds.com and fill out an online application form.

• For a Self Assessment Tax Return, you would need to send 1^st Contact a statement of earnings, in order to show how much you earned whilst self employed. 1^st Contact will also need any P45/P60 docs from any PAYE or full time employment you may have had.

• This must be posted to 1^st Contact along with the completed claim pack (details can be sourced at www.1stcontact-taxrefunds.com). You will also need to provide your UTR (Unique Tax Payers Reference number).

For a CIS (Construction Industry Scheme) Tax Return, 1^st Contact will require the following:

• Pay slips for the tax year or your statement of earnings from each employer you may have had. If you have had PAYE or permanent employment in the same period, then you will also need to submit your P45’s and P60’s as well.
• You can claim expenses for work purposes only, where 1^st Contact will need a break down of these expenses, as 1^st Contact can claim 10% of your salary as expenses.

Late returns will automatically receive a £100 penalty and a second £100 fine applies if you have not filed and paid by 28 February. Any further delays could result in more serious penalties. It is important to note that it is a legal requirement to keep your filed tax return and related information for 6 years, so it is advisable to always keep copies whether on file or electronic copies.

2. Check your Tax Code

Always check with your personnel department, that you are being taxed under, that you have the correct tax code. If you are still unsure, visit the HMRC website, where you fill in your PAYE number and they will direct you to the tax office where you can obtain the correct information. Visit the following link to obtain more info http://search2.hmrc.gov.uk/kbroker/hmrc/locator/locator.jsp?type=1

An incorrect tax code is the leading cause of overpaid tax and this occurs when starting or moving work together with paying emergency tax. Use our convenient Tax Refund Calculator and see if you are due a tax rebate or visit www.1stcontact-taxrefunds.com for more information.

3. Check Previous Tax Returns

It is crucial to check for incorrect Tax Codes on previous returns, since you can claim a tax refund as far back as 5 years. 1^st Contact offers a no refund no fee policy and will be able to look into this for you. Alternatively, use 1^st Contact’s Tax Calculator or feel free to check our tax calculator to find out if you are eligible for a tax rebate.

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You may be set for a tax refund, without even knowing it. According the Chartered Institute of Taxation, HM Revenue & Customs has sent the wrong tax codes to a number of people throughout the UK due to a fault within their IT systems.

Expert tax, financial and migration group, 1^st Contact, one of the largest and experienced tax agents in the UK, have called on those who have worked in the UK for any period of time to verify if they are due a tax refund.

The HMRC database reportedly lost information it held concerning tax-payers who had left their jobs. As a result it combined current employment records with old data, concluding that those currently holding one job are actually earning in the region of two incomes. The result: many tax payers have been incorrectly placed in higher earning brackets and have paid more tax than they ever should have.

1^st Contact currently operates a tax refund calculator which ensures tax payers know the amount owed to them in the form of tax refund.

The HMRC database reportedly lost information it held concerning tax-payers who had left their jobs.

John Dunn, Tax Refunds manager at 1^st Contact, stresses the massive importance of checking if one is eligible for a tax refund, since numerous tax payers are unaware of the fact that they are being overcharged and have earned the right to a fair tax rebate.

“We will make sure the codes used were correct and if not we will apply for the maximum refund due to each person who approaches us for assistance”, says Dunn.

Dunn explains that it is advisable for individuals to check their tax codes. “Look on a ‘PAYE Coding Notice’ if you have one – this notice tells you what your tax code is and is usually sent out in January or February each year. If you find out you are listed under the wrong code and due for one of the numerous tax refunds to which you are eligible, contact your tax office straight away.”

Using 1^st Contact’s online Tax Refund calculator , coupled with the company’s experience and accreditations with numerous UK accounting bodies, 1^st Contact is playing an essential role in ensuring that thousands of tax refunds are paid back to eligible candidates.

Dunn says “We will continue to ensure that the public are made aware of their rights and eligibility to access their tax rebates”.

For more information on how to claim your tax refund visit http://www.1stcontact-taxrefunds.com

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This comes with a guaranteed professional team of top experts combined with an established and long standing relationship with the relevant UK authorities.

According to John Dunn , Tax Refunds manager at 1^st Contact “we advise individuals to be wary of tax agents that are offering a commission below 12.5%, as this type of offer usually typifies fly by night companies that could take the money of unsuspecting customers, only to close down in the blink of an eye.”

“We advise individuals to be wary of tax agents that are offering a commission below 12.5%”

Senior management at 1^st Contact explain that their offices across the globe are increasingly receiving calls from distressed consumers who have been referred to 1st Contact, only after seeing their hard-earned cash taken by unscrupulous fly-by-night operators. The issue has also hit news headlines, with the Guardian exposing one firm charging a customer £1,500 for an error on the part of the Inland Revenue. Tax Rebates and the process of claiming tax back requires transparency, stresses 1^st Contact.

The more transparent the tax agent is the better equipped individuals will be to safeguard against exploitation. Dunn adds that it is advisable for individuals to check that the tax agent is registered with the ATA (Association of Tax Agents). The ATA are a regulatory body that will ensure that customers have 100% guaranteed protection on their tax refund claim.

“Failure to present a proven track record or an established relationship with the UK government and ATA is enough evidence to expose fly by night tax agents,” says Dunn.

1^st Contact is regarded by many as having set the benchmark for good practice given its experience in handling over 100 000 tax rebate cases to date.

Dunn explains that 1^st Contact work on a policy of “no refund, no charge” and the company’s membership with the ATA ensures clients can have 100% guaranteed protection on their tax refund claim.

“While tracking the claims of each customer, we keep each individual regularly updated by text message, e-mail or phone. No other company in the UK makes more submissions to Her Majesty’s Revenue & Customs than 1^st Contact.”

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