Have you ever thought something was too good to be true? Like when you get a free scratch card in the paper telling you you’ve won £100,000, yet looking at the T&Cs it costs £5 per minute to call and there’s only one top prize to be won. So after 15 long minutes on the phone, speaking to an automated voice recording, you end up winning a £20 voucher for a garden centre that is 30 miles away from your 3rd floor flat. All in all, you’ve lost £55 and 15 minutes of your time that you’ll never get back. Unfortunately, when choosing a payroll provider, the case still stands that some things really are too good to be true… There are many compliant payroll providers on the market who are happy and willing to give you the correct information to ensure that your finances are safe and sound. However, just as there are many compliant providers, there are also providers who aren’t as willing to keep things within the rules. When looking into your chosen payroll provider, you may find that some are quoting a considerably higher take-home pay than others. The difference in your take-home pay between providers ought to be minimal, as they should all be making the same necessary deductions. This includes Income Tax, Employer’s NI and Employee’s NI. The only real difference between providers should be the margin they charge. If you find you’re being quoted much more through one provider, chances are it’s too good to be true. There are a few things you can look out for to ensure you’re choosing a compliant provider who has your best interests at heart. Things to note are:
- Receiving 80% of your Gross Income – If you’ve been quoted around 80% or more, this could potentially be a tax avoidance scheme known as a Contractor Loan Scheme. Providers will advise that your income is paid via a loan, therefore non-taxable. This of course isn’t true. If investigated, you may have to pay back any unpaid tax to HMRC (and they usually win around 80% of all cases).
- Expenses – If expenses are added into your Umbrella quote without any questions regarding your working practises and assignment, these could be incorrectly included. Providers need to carry out an SDC Questionnaire (Supervision, Direction or Control) to see if you’re eligible for work-related expenses. These are rules set out by the Government that each provider should adhere to.
- Awards and Accreditations – Compliant providers will usually have some of the following accreditations, which show that they’ve demonstrated a high standard of compliance and knowledge within the industry: Professional Passport, FCSA, Prism, APSCo and CIMA.