In this guide, Umbrella Supermarket will outline the key points every contractor needs to know about what the 2021 budget means for them.
The government’s Job Retention Scheme was introduced in March 2020 when the pandemic and subsequent lockdowns hit and has since been extended several times.
The scheme was introduced to help employees that could no longer maintain their workforce because they have been badly impacted by coronavirus. Such businesses had the option to put their employees on furlough. This is a grant that covers 80% of the employees’ monthly wage up to a maximum of £2,500 per month.
An employee can be furloughed for any amount of time and with any working pattern as long as they pay PAYE tax. A worker is eligible for furlough whether they work full-time, part-time, on a zero-hours contract or through an agency.
This means umbrella company contractors have been eligible to receive furlough pay. This is because the umbrella company employs you and deducts your tax contributions through the PAYE system.
For more information, check out our handy guide on the Job Retention Scheme for contractors.
Although the scheme was initially set to end at the end of April, the good news for umbrella contractors who’s work continues to be badly impacted by COVID-19 is that Sunak has announced that the furlough scheme has been extended until the end of September.
This means that the government will continue to pay 80% of employees’ wages for the hours they can’t work.
Although this is great news for umbrella company contractors, what about self-employed contractors who are not entitled to furlough pay?
The Chancellor has also announced that support for the self-employed will be extended until the end of September 2021.
This is good news for the thousands of limited company contractors who operate on a self-employed basis.
Again, the Self-Employment Income Support Scheme was introduced to help those who work for themselves and have been badly impacted by the pandemic.
Self-employed workers can apply for the grant online through the HMRC website and must make an honest assessment about whether their business has experienced a significant reduction in profits due to the pandemic.
You will receive 80% of your average monthly trading profits which is paid out in a single instalment covering 3 months’ worth of profits with a limit of £7,500.
What’s more, it was announced that the scheme will be extended to an additional 600,000 people who were not eligible for the first three grants.
This is because the government is now letting workers submit their 2018-2019 and 2019-2020 self-assessment tax returns as evidence of their earnings. They previously only accepted 2018-2019 tax returns which meant thousands of newly self-employed people did not qualify for the grants.
This is great news for any workers that are new to contracting and were therefore not previously eligible for support.
A fifth grant will also be available from May onwards that will target support for those most badly affected. This means only those whose turnover has dropped by 30% or more will continue to receive the full 80% grant for an additional 3 months. However, those whose turnover has dropped by less than 30% can receive a reduced grant of 30%.
Sunak announced that the personal allowance tax threshold will be frozen from April 2021.
What’s more, income tax thresholds are set to rise by 0.5%. The basic rate income tax threshold will increase from £12,5000 to £12,570 and remain at this level until 2026. Likewise, the higher rate threshold will also increase from £50,001 to £50,270.
Although this means you can earn an extra £70 without paying any income tax, as the thresholds are set to freeze until 2026, many people will be pushed into paying more income tax as their wages increase over the next 5 years.
These changes may impact umbrella company contractors who pay tax under the PAYE system, as they mean that thousands of workers might end up paying more tax in future years.
In April 2020 changes to IR35 legislation were postponed until 2021. Many contractors had hoped that there would be a further delay to the rollout of the off-payroll legislation in the private sector announced in the 2021 Budget.
After all, thousands of self-employed workers have already been badly impacted by the pandemic and are set to be further harmed by changes to IR35 legislation that will come into motion from April.
However, there was no further postponement announced in the 2021 budget.
There was no mention to the off-payroll rules from the Chancellor which has effectively put an end to any hopes from contractors of last-minute changes.
With no delays to IR35 announced, thousands of self-employed contractors will now be considering switching to umbrella. After all, working under an umbrella company automatically makes the contractor exempt from IR35 legislation, meaning there’s no need to worry about getting caught out.
If you have decided that this is the best path for you, let Umbrella Supermarket help with the next steps.
Umbrella Supermarket will help you find the best umbrella company out there for your needs. After all, there’s plenty of choice when it comes to who you will work with, so it’s always best to do your research to find your perfect fit.
In just 2 minutes you can enter a few personal details into our handy umbrella comparison calculator and browse a list of umbrella companies best suited to your needs. Whether you are looking for more money or help with things like childcare credits, we help you cut out the noise and focus on the companies best suited to you. Why not try it for yourself?
Any contractor considering switching to an umbrella company will want to know how to find the best provider to work with.
Although you could spend your precious time and energy searching the web for the best umbrella company, there is an easier way – using an umbrella calculator.
In this guide, Umbrella Supermarket explains why every contractor should use an umbrella calculator in 2021.
If you are considering contracting you will need to decide on PAYE or umbrella.
It can be a difficult decision to make and contractors will inevitably be questioning which option will be the best for them.
To help every contractor get on the right track for them, in this guide Umbrella Supermarket looks at PAYE vs umbrella, outlining the key differences and how this will impact you.
There are many reasons that contractors across the UK opt to work under an umbrella company.
Umbrella companies offer an easy way to contract and remove the need for the contractors to worry about the burdens of admin, finances, tax and IR35, all things that limited company contractors have to deal with.
For this reason, many contractors will be weighing up their options and questioning whether it is worth using an umbrella company in 2021. To help make the decision that little bit easier, Umbrella Supermarket has put together this guide on the pros and cons of using an umbrella company.
Any contractor that is considering operating through an umbrella company in 2021 will need to understand Umbrella Company fees - from why an umbrella company charges fees, how they are paid to how much the contractor will pay.
In this guide, Umbrella Supermarket answers those all-important questions to help every contractor know exactly where they stand when it comes to umbrella company fees.
If you’ve made the decision to contract through an umbrella company in 2021, you will next need to find an umbrella company that’s right for you.
After all, there are lots of umbrella companies out there, so how do you know which one to choose?
To help you find the best umbrella company for you, in this guide Umbrella Supermarket outlines what makes a good umbrella company, so you can rest assured you’re making the right move.
One of the many advantages to operating through an umbrella company for contractors is that they become an employee of their chosen provider.
In turn, this means that the contractor will be automatically enrolled onto the umbrella company’s workplace pension scheme.
To help contractors find out more about umbrella company pensions Umbrella Supermarket has put together this handy guide.
If you are considering contracting through an umbrella company you will naturally have questions and queries over how they work.
After all, making the move to umbrella can be a big step for contractors. To help, in this guide Umbrella Supermarket explains how to get started with an umbrella company and share our top tips for using one in 2021.
PAYE or umbrella is a question asked by every contractor. Which one you opt for will have a big impact on your contracting career and lifestyle. So, it's important to make the right decision for you.
To help makes things a little bit easier, Umbrella Supermarket has put together this guide on PAYE or umbrella, outlining the key differences between each, to help you make the best and most informed decision for you.
One of the many benefits to working through an umbrella company is that you will receive holiday pay as well as a range of other statutory benefits including sick pay, maternity and paternity pay.
To find out more about umbrella company holiday pay, and how to calculate how much you will be entitled to, Umbrella Supermarket has put together this handy guide.
Contractors must make several decisions throughout their contracting careers. One big decision contractors have to make is how they will operate.
One way that contractors can work is through an umbrella company.
Umbrella companies have become an increasingly popular way to contract in the past few years, offering many benefits to the contractor. But, how do you know whether this option is right for you?
To help every contractor make the right decision for them, in this guide, Umbrella Supermarket explains when not to use an umbrella company.
There are tons of benefits to using an umbrella company, which is why they have become such a popular option for contractors in recent years.
After all, an umbrella company takes away the stress and hassle of operating through a limited company whilst offering contractors a range of advantages, such as statutory rights, paying them a salary, deducting correct tax levels and National Insurance, and taking care of tasks like expense processing and invoicing.
However, as more and more contractors opt to use the services of an umbrella company, more providers have started to claim that they are HMRC approved.
To bust the myths around HMRC approved umbrella companies and get straight to the facts, in today's guide Umbrella Supermarket look at whether HMRC approved umbrella companies really exist, so you know exactly where you stand.
If you're considering making the leap to contracting, you will understandably want to know how much you will have to pay in umbrella company costs. After all, this amount comes directly out of the contractor’s pocket, so it’s important to be clued up on how much you should expect to pay.
To help contractors, in this guide Umbrella Supermarket answer the all-important question of how umbrella companies cost in 2021.
