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A key benefit of contracting through an umbrella payroll is that your umbrella company handles your tax deductions and administration while ensuring compliance with HMRC requirements. They also manage several key tax deadlines throughout the year. This blog provides an overview of these deadlines and how your umbrella company handles them for you.
The UK Tax Year for Umbrella Contractors
The UK Tax Year runs from the 6th April every year and ends on the 5th April of the following year.
As an umbrella employee, you are paid via PAYE, meaning that you don’t need to complete a Self-Assessment Tax Return. So, you don’t need to concern yourself with a lot of the tax deadlines. However, for the three which do apply to umbrella employees (even though your umbrella company handle them), it’s useful to understand them.
Image: Key UK tax dates at a glance
19th May- P60 Issued
As a Danbro Umbrella Employee, you should expect to receive your P60 by the 19th May, however, it is more likely than not that your P60 will be sent within the first 2-4 weeks of the year end.
In case you didn’t know, P60s summarise your earnings and tax paid for the previous tax year. Your P60 serves as confirmation of the taxes you’ve paid. It will present a summary of the following from the previous tax year:
- Your total earnings
- The tax you’ve paid
- National Insurance Contributions over that year
- Student loan deductions
- Any statutory payments (Statutory Sick Pay, Statutory Maternity Pay, Statutory Paternity Pay)
- Employer’s details (this includes your employer’s name and reference number)
6th July- P11D Submitted & Issued
If your employer has provided any benefits in kind, such as medical insurance, your umbrella company must submit a P11D to HMRC, and provide a copy to you, by the 6th July.
Examples of items your umbrella company may report in a P11D include:
- Company cars or fuel provided for personal use
- Interest-free or low-interest loans
- Living accommodation provided by the umbrella company
- Other benefits such as gym memberships, non-cash vouchers, etc.
You won’t receive a P11D Form if you do not get any benefits in kind, and only receive your salary.
If you do receive a form from your employer, make sure you do the following:
- Check the Details: Review the form to ensure that all the benefits listed are accurate and reflect what you received from your employer.
- Understand Your Tax Liabilities: You will be taxed on the total value of these benefits, and any tax owed will be collected through your tax code.
- Submit Your Self-Assessment: If you complete a Self-Assessment tax return, the P11D will be crucial in calculating your final tax bill. So, ensure the details from the form are accurately included in your submission.
If you are employed via PAYE and do not receive a P11D by 6th July, you must contact your employer as they are obligated to provide it, if applicable.
As a Danbro Umbrella employee, you will receive access to Danbro Rewards and private medical insurance. Therefore, you will receive a P11D form stating those benefits.
30th December- Self-Assessment Online Filing Deadline (Pay Via PAYE)
If you are an umbrella employee who earns over £150,000, or are a higher rate taxpayer and are in the AE pension, then you will need to complete a Self-Assessment. If you have any questions regarding this, then feel free to ask us.
For umbrella employees, who do not fall under that category, then your umbrella company will liaise with HMRC to ensure that your tax code is up to date. Your umbrella company will verify that your tax code reflects any changes that may have occurred throughout the year, and will update your tax code accordingly. This helps umbrella employees avoid overpaying or underpaying taxes.
For an easy explainer on Tax Codes, watch our video below.
Hopefully, this guide gives you an overview of the three tax dates that apply to umbrella employees and what to expect from your umbrella company.
To reiterate, contracting through an umbrella company means that you do not need to worry about Self Assessment deadlines throughout the year, unless you fall under the category described above (under self-assessment online filing deadline). If you think you need to submit a Self-Assessment, you can learn about other deadlines within the tax year here and explore Danbro’s Self Assessment Service.
The key benefit of being a Danbro Umbrella Employee is that we handle all of your admin. If you have any further questions surrounding umbrella employee tax or what other benefits Danbro Umbrella offers, get in touch.
