Specialist accountancy firm Danbro are urging contractors to wise up to the dangers of using non-compliant umbrella companies. In a recent survey of contractors who had switched to Danbro, after using another umbrella company, they came across yet another issue of compliance that they thought would have been eradicated long ago.

Any experienced contractor accountant knows that tax and national insurance has to be paid on the national minimum wage, regardless of the amount of expenses you put through an umbrella company. Only earnings above the national minimum wage can be offset against tax and NI when claiming legitimate business expenses.

However Danbro's findings show that certain umbrella companies are blatantly over looking this and are allowing their contractors to pay zero tax and NI on their pay, if they are to claim the optimum amount of expenses. This may seem great to the un-knowing contractor; taking home over 90% of their gross pay, but little do they know they could owe up to £3400 at the end of the tax year. An amount HMRC will undoubtedly be recovering back from the contractor and not the non-complaint umbrella company.

In order to avoid this risk of owing thousands of pounds in tax and national insurance to HM Revenue and Customs, it is imperative that contractors ensure that their umbrella company not only has the right accreditations but they are also fully HMRC compliant in their knowledge and experience. This ensures contractors stay safe from the risks of incorrect tax and NI calculations.

If you are worried that your umbrella company is not 100% compliant, feel free to contact one of Danbro's experienced consultants for unbiased, no obligation advice on 0800 731 3178 or

Head Office: 01253 600140
London Office: 0207 836 84000
Manchester Office: 0161 238 4918

Alternatively send an email to enquiries@danbro.co.uk

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