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Agency Reimbursed Expenses Explained
When an Agency reimburses expenses It’s not as simple as making an onward payment to you as we have the tax liability with HMRC to
Recently we were asked why our payslips show two separate amounts; basic pay and commission as they were wanting to check that everything had been declared to the HMRC correctly.
The simple answer to this is in accordance with the contract of employment between the umbrella company and the contract worker an employee must always be paid at least National Minimum Wage for all hours worked, this is a protection for workers in the UK. With umbrella employees working multiple assignments during their employment with the umbrella, it is easier for all parties to have one overarching contract of employment rather than having to create a new one for each assignment undertaken. The contract therefore states that payment will be made of a basic payment (NMW) plus a commission or discretionary bonus.
Most umbrella companies will pay you ‘basic pay,’ which is calculated according to the total hours worked multiplied by the National Minimum or Living Wage. This will be included on your payslip for the period in question.
For most umbrella employees, the remainder of the salary payment will appear as either ‘commission’ or ‘bonus.’ This remainder is anything that is above the basic rate of pay, and will be included with the other pay elements to form your gross taxable pay.
*Please note that even if you see two amounts on your payslip, both of these are calculated for your personal tax and NI purposes*
However if you add the income figures together you will not get the value of the contract rate which the agency has quoted for the assignment. This is because the contract rate is not the same as your payment rate. In order to explain this clearly, we need to go back to the movement of funds prior to a contractor being paid by an umbrella company:
At UC Contractors, we provide you with two payment documents on your personal system:
If you have any questions relating to your umbrella payslip please do not hesitate to contact us for clarity.
When an Agency reimburses expenses It’s not as simple as making an onward payment to you as we have the tax liability with HMRC to
Being part of a meeting to discuss payments can be a little daunting and nerve-wracking but it’s also a great time to demonstrate your value
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