90% Plus Umbrella Net Take Home Pay – What To Look Out For90% Plus Umbrella Net Take Home Pay – What To Look Out For

If you are contemplating working through an umbrella company, you will likely spend a large amount of time comparing your options. In doing so, you will almost certainly see advertisements from umbrella companies that claim to offer “90% plus take home pay”.

As a contractor seeking to maximise their earnings, 90% take home pay sounds like a dream come true – but unfortunately, these claims can quickly turn into a nightmare.

90% take home pay is never feasible

The idea of being able to keep 90% of what you earn may be tempting, but it can only be achieved under a very specific set of circumstances. Let’s crunch the numbers:

• The rate of tax is the rate that anyone earning above the tax-free personal allowance must pay by law.
• Everyone receives a tax-free personal allowance of £11,850.
• Anything earned after this amount is taxable. This means that anyone in full-time employment must pay tax, as a full 40-hour week at the national minimum wage exceeds the tax-free allowance threshold. If you work full time, you must pay tax.
• If you earn between £11,851 and £46,350, you will pay 20% of your taxable income in tax.
• If you earn between £46,351 and £150,000, you will pay 40% in tax.
• If you earn over £150,000, you will pay 45%.

Given the above, we can conclude that unless you are earning less than your personal allowance of £11,850, you must pay tax at a rate of 20%.

So how can you legally achieve a take home pay of 90% – which is just a 10% tax rate – with an umbrella company? You can’t. It’s illegal.

So why do companies advertise 90% take home pay?

There are two reasons an umbrella company may advertise a 90% take home pay, and neither are positive:

• They are advertising this rate with a caveat – i.e. you can achieve this rate if you earn less than your personal allowance. This isn’t technically a lie as it can be true, but if you work full-time, you will definitely earn over your personal allowance – so really, it’s just marketing spin that applies to only a tiny percentage of contractors.
• More worryingly, a 90% take home pay could indicate that the umbrella company are involved in a tax avoidance scheme. If this is the case, working through such a company could have catastrophic consequences for you in the future.

HMRC and tax avoidance

Tax avoidance schemes are always illegal.

If HMRC find that you owe money in unpaid taxes, they will issue a demand for payment. You can try to argue that you did not avoid tax – your umbrella company did – but HMRC have the power to demand you ‘pay now, dispute later’. Due to this, you would still need to pay the back-taxes even if it is the umbrella company who were at fault. You could then dispute this with HMRC and claim a refund, but only after you have settled the debt in full – and even then, there’s no guarantee that the appeal would be successful.

So what should you do instead?

• Ignore companies that claim to offer you 90% take home pay, as this cannot be legal. This point cannot be overstated enough; there is no such thing as a legal or permitted tax avoidance scheme – no matter what companies claim on their website!
• Look for an umbrella company that pays you via the PAYE system
• Check all monies received to ensure that you are paying the right rate of tax for your income.

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Great Organic Wine and Beer Featured in Organic RestaurantsGreat Organic Wine and Beer Featured in Organic Restaurants

If you’ve made the commitment to adopt a completely organic lifestyle, you may have resigned yourself to a life without happy hour drinks. You don’t have to! Many great organic wine and organic beer choices await you on your favorite organic restaurant’s drink menu. Look for these excellent organic vintages and brews to pair up with your next organic meal.

Notable Organic Wine Vintners

Perlage 

Perlage, one of the old wineries in Northern Italy, converted to organic growing practices in 1985. Grape varieties include Prosecco, Merlot, Cabernet, Pinot Grigio and Chardonnay, among others. Perlage is most well known for its sparkling wines, which appear on organic wine menus everywhere. Of particular interest are the Perlage Proseccos, sparkling white wines that have a nice, peachy taste. Its Pinot Grigio and Sangiovese consistently also receive good reviews year after year.

Badger Mountain

Grown in the Columbia Valley, Washington premier growing region, Badger Mountain emphasizes its commitment to organic farming and production methods as a way to protect the environment and provide a completely natural wine for organic wine drinkers everywhere. Wine varietals include Riesling, Chardonnay, Cabernet Sauvingnon, and Merlot, as well as some white and red table blends. Badger Mountain’s Chardonnay and Riesling both receive good reviews, with the 2008 Chardonnay rating especially high.

Bodega J. & F. Lurton

This Andes winery located in Piedra Negra, Mendoza is known for its outstanding Malbec. The grapes thrive in the Uco Valley, 3,000 feet above sea level, producing an especially rich flavor that is featured worldwide in organic restaurants. The 2002 was a particularly good year, followed by a very strong 2003 vintage.

Good Organic Beer Breweries

Otter Creek Brewing

Otter Creek Brewing began as a microbrewery in 1991. It introduced the Wolaver’s Certified Organic beer series in 1998, and the organic beer continues to be popular today. Wolaver’s ale varieties include pale, india pale, brown, oatmeal stout, and wit bier. There is also a seasonal pumpkin version that gets good reviews.

Pinkus Organic

Located in Munster, Germany, the Pinkus Organic brewing family is currently in its sixth generation. It has the special distinction of being the world’s first brewery to produce 100% organic beer. It is also USDA-certified organic. Offerings include Ur Pils, Jubilate, Munster Alt and Hefe-Weizen. The Ur Pils is especially popular, earning 4 or greater on most 5 point reviews.

Happy hour can be happy again for organic diners! The next time you’re in the mood for a drink with your dinner, ask for the organic wine list at your favorite organic restaurant. You’re sure to find something to please.

Vladmir Grinberg has been involved in the natural food industry since 2001. He has made it his mission to promote healthy food choices by educating readers about the benefits of natural and organic foods. To help make healthy food more convenient for busy people, Mr. Grinberg also started OrganicDirect, an organic food delivery service for the New York Metro area.