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Umbrella Company Pension Schemes – What You Need to Know

Pension schemes help employees put money aside for retirement directly from their wage. The problem for self-employed professionals is that they need to manage this themselves,either by setting up a pension scheme or saving money from their income.

Fortunately,umbrella companies class contractors as employees,giving them all the benefits of employment. That includes a pension scheme,which now requires contribution from the umbrella company too. Let’s take a closer look at the statutory pension schemes available through umbrella companies.

Auto-enrolment pensions

In 2012,the UK Government decided that workers weren’t saving enough for their retirement. People were relying too much on the State Pension,which had not received adequate funding to match the continuing rise in life expectancy and an ageing population.

To combat this,they introduced automatic enrolment. The new system,rolled out from 2012 to 2018,requires employers to automatically enrol eligible employees onto a workplace pension scheme. Employers are also responsible for deducting contributions from their pre-tax income and making a minimum statutory contribution to the employee’s savings.

In October 2012,this minimum contribution was set to 1 percent for employees,which was matched by employers,rising in 2018:

• October 2012 to 5th April 2018: employers 1%,employees 1%
• 6th April 2018 to 5th April 2019: employers 2%,employees 3%
• 6th April 2019 onwards: employers 3%,employees 5%

However for anyone that doesn’t want to contribute to a pension once you’re enrolled you can still opt out.

Umbrella company pension scheme

Working through an umbrella company,contractors are classed as an employee. That means,yes,you are automatically enrolled onto the umbrella company’s pension scheme as long as you meet the following criteria:

• Your work is primarily UK-based
• You earn more than £10,000 per year
• You’re between 22 and the state pension age.

Until 5th April 2019,3% of your pre-tax salary will go directly into a pension fund,with the umbrella company contributing a further 2%. From 6th April 2019,5% of your pre-tax salary will go into the same pension fund,with your umbrella company contributing a further 3%.

The benefits of an umbrella company pension

Some contractors may worry that this will eat away at their wages. Don’t. Pension contributions are made before your wages are taxed. That means anything that goes from your wage into your pension fund is tax-free rather than being taxed at 20% or even 40%. So,instead of receiving 60% of your income,you receive 100% via a pension fund.

Let’s say you earn over £46,351 per year,which puts you in the higher rate band of income tax. Anything you earn beyond that £46,351 per year (roughly £3,863 per month) is taxed at a rate of 40%. You get just £60 for every £100 of income. Why not put the full £100 straight into the pension fund instead?

That’s why many people,especially those in the higher rate band of income tax,choose to put more than the minimum into their pension fund. And this is entirely possible. Contractors can contribute up to £40,000 to their pension scheme per year,comprising tax-free income and employer contributions. Currently,there is a lifetime allowance of £1,030,000 which can be contributed before incurring any tax.

Using your funds

With the increased earnings of contracting,it’s common for contractors to retire early. Alternatively,you might simply want to get some of the money out for a holiday,new car or home improvement. The good news is: you don’t have to wait until the state pension age to access the pension funds you’ve built up through your umbrella company pension.

Once you’re 55 or over,you can access up to 25% of your pension pot as a tax-free lump sum. Anything beyond the 25% will be taxed as an addition to the rest of your income that tax year – either 20% over £11,850,40% over £46,351 or £45% over £150,000,as things currently stand. That’s why most people choose to take their pension as regular income once they have retired,to minimise the amount of tax paid.

What about limited companies?

Contractors who operate as a limited company can still benefit from the tax relief of a pension scheme. However,as with most things relating to limited companies,this requires a lot more effort on their part. Firstly,they have to get the right balance between salary and dividend payments to increase the limit on their pension contributions.

Because employer contributions,such as pensions,count as a business expense,they are subject to tax relief. So,when you contribute to your pension scheme,as a director,the company could save money in corporation tax.

However,this has added complications because it needs to be fully compliant as an allowable expense. Any other employees,for example,should be given comparable packages to prove to HMRC that it is a genuine business expense.

On top of all that,using a limited company pension scheme means setting up and paying into the pension fund yourself. Along with all the other administrative work for limited company owners,it’s definitely worth seeking advice and assistant from a trusted accountant.

Get the right assistance

Whether you’re looking to compare umbrella companies or find the right accountant,you can make the right choice with -. Our online comparison tool lets you assess multiple companies in a matter of minutes. It couldn’t be easier to take the hassle out of contracting. Contact us today for more information.

Local search engine optimization or local SEO is an important marketing aspect in the world we live in today. Every major search engine puts a substantial amount of importance on local content. If you want your possible new customers to see your business on top for their search,then your content has to be properly optimized,ready and waiting for users to pick up. People do not have the time to dig deep for information on services or on any topic. They rely on the immediate results and an excellent local search can help make that possible.

The best success comes to those who use local search engine optimization properly,but there are those who fall prey to some common mistakes. In this article,we are going to show the most common local SEO mistakes that you should avoid.

Inconsistent or Inaccurate Information

Search engine rules keep on advancing,but they are far from being perfect and can be confused. This means that inconsistent and inaccurate information can only negatively affect your local search engine optimization campaign. Google,Yahoo and Bing will all be thrown off by websites and pages that have different contact information and addresses.

Too Many Local Specific Key Terms

Information regarding your town,city or location can help if used properly. Your content must provide information about your area,but it shouldn’t be crammed with local specific phrases for the sake of having more text. You want to impress your target audience which are the individuals in your local area that you’re trying to reach with content that will get them to act.

Too Much Emphasis on Keywords

Rather than worrying about using keywords that are specific to your niche and location,and then attempting to create valuable content using them,you should instead focus on utilizing simple and easy to use phrases that will surface naturally when creating your content. For the best results with local SEO,you need to develop content and not just local or industry-specific keywords.

Settling on Your Current Locality

Local search engine optimization is constantly altering and so,settling on your current spot on the listings and search engine results pages (SERPs) won’t do you any good. You must constantly engage with your clients and prospects. Blog content,videos,photos and social media posts are an excellent way to connect with your customers.

Concentrating on the Same Keywords

Of course,keywords are crucial in local SEO and are in fact the foundation of this form of marketing. However,utilizing the same few specific keywords every time will not help as every user thinks differently and will search a different set of phrases over time. As such,you need a variety of keywords that are not only simple but applicable to your business. They also must be specific to the local region you are targeting and match the target audience of your campaigns.

Get more advice from SOM – SEO Consultancy Hereford

A document shredding machine is a piece of equipment used to shred paper into fine pieces or strips. Most businesses, government agencies, and private people also use document shredders to do high security shredding,CPNI standard,private,sensitive,or otherwise private document shredding. The original paper that you choose will affect how quickly the documents will be shredded. You can get a machine that will shred paper as quickly as possible or one that may take longer depending on the type of paper. If you are using paper for your document shredding needs you need to decide which type of paper you need to purchase and how many pages you would like the machine to shred. There is nothing worse than finding yourself in the emergency room with a very large stack of shredded papers.

One type of paper that can easily be purchased for document shredding is cardstock. This type of paper will make your job a lot easier because it is very absorbent. This is great because if there is a fire or other disaster and you need to store the paper for emergency purposes,the paper will be safe,it will not go up in smoke or get wet. If you choose a paper that is more absorbent and easy to manage,you may find that you need more paper than you anticipated. If this happens,you can always have a more appropriate machine in the back of the truck to take care of the extra paper. Paper that is more absorbent will cost more but you should make sure that you have enough before buying the paper. The same goes for a paper that will take longer to shred.

An important factor when purchasing paper for your document shredding needs is its durability. You want paper that will stand up to the abuse that is put on it during your document shredding. Paper that will last longer should not be an issue if you choose a durable paper type. You also want to make sure that you have the machine in the back of your truck to ensure that you do not need to travel to get your paper. Make sure that you choose a paper that will meet all of your requirements for document shredding. If you can’t find what you are looking for then you might want to consider looking online for a quality paper that you can trust for document shredding purposes.