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bigduckontax
bigduckontax, Accountant
Category: Tax
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I am advised by my umbrella company that I must change from

Customer Question

I am advised by my umbrella company that I must change from being self employed to PAYE because of recent changes in the FSI's assessment criteria. As I am apparently working for a single client I am now classed as self employed.

My major concern is that I am now 66yrs therefore I do not pay NI yet I am now expected to pay the employers NI liability out of my day rate and furthermore I can only claim 40% of my expenses. I work 3 days a week in London and reside 3 nights per week as travelling daily from where I live is not an option, therefore my expenses are higher than most.

1. Am I being correctly informed
2. What do you consider to be my options
Submitted: 2 years ago.
Category: Tax
Expert:  bigduckontax replied 2 years ago.
Hello, I'm Keith and happy to help you with your question.

FSI is a measure of financial soundness introduced by the IMF. It would appear irrelevant to your circumstances. Your umbrella company would appear to have got hold of the wrong end of the stick if they have even found the stick at all!

You may continue as self employed. I would be inclined to ditch your umbrella company. If they insist on putting you on PAYE complain and if they persist sue them in the Small Claims Court for sums incorrectly deducted.

However, there is another view on this matter. If you have a business relationship which looks like 'employer/employee' then the law will usually treat you as an employee which means that you will enjoy all the statutory protection that status affords and it also means that your employer can deduct PAYE. This rule is there to prevent employers trying to evade their legal responsibilities.

I am somewhat confused as to why you say you will be expected to pay the employer's element of NI; that is not your responsibility and at your age NI contribution will be close to nil. Your whole situation appears a trifle odd to say the least.
Customer: replied 2 years ago.

I am not sure you have taken into account the relationship of the umbrella company who are a third party in the relationship. I am not contracted to them they are merely the agent who deals with the invoices but they will in effect become my employer even though I am working for another company. I am not sure that you are up to date on the re alignment of the legislation that came into effect on the 6th April so you are not able to help me and therefore I would appreciate a refund of the monies paid.

Expert:  bigduckontax replied 2 years ago.
The changes post 6 April are to provide for the situation of false self employment through agencies. The acid test is if the umbrella company tells you what to do and how to do it then it is not self employment, but an employer/employee relationship is created. If you are told what to do, but not how to do it then it is self employment.

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