Help! Is DH being ripped off?

[mumtochloe]

DH works as a plant operator and is doing contract work at present. He earns £8.50 per hour and works 39 hours per week yet only picks up between £237-£247 per week. The amount he is paid always seems to vary even if he does the same hours and he also has to pay £20 per week to a composite company to process his wages. WTF???? Apparently this is because they pay him as a Ltd company to avoid paying as much tax but he seems to be paying more if anything

Does this sound normal to you guys? Can anyone help please? I've tried to work out his payslip but it is really confusing.

Thanks!

Have you checked with Inland Revenue regarding Employment Status... I would suspect that paying him as a Ltd company is not totally above board. From the sounds of it he should have Employed Status from either the Agency which arranges his contracts, or possibly even from the company he's directly working for. Contracting rules can however be rather complex and depending on your exact situation - if he is a Limited Company then he may be better off keeping it that way if he's able to claim back a large amount of tax.

If talking to IR is a bit much, and you feel could create more problems than it's worth... contact your local CAB and have a chat with them.

does sound dodgy, but I can't say without seeing all the paperwork. If he's being "paid as a Ltd company" then he must have signed papers to create the company - do you have those? If he did then it may be above board - the composite company would take out different amounts depending on the work they've done (eg paying the VAT). If not it's dodgy as hell.

Hello

Thanks so much for your replies.

If it helps, the company give him a share in the company which does not increase in value, and he gives it back if / when he leaves. This is apparently how they get round it, but the whole thing baffles me.

Does this make it any clearer to the wiser mumsnetters out there?!

Yours confusedly xx

Are the company saying he is a separate Ltd company, or have they made him a director of theirs?

This sounds very dodgy to me. The IR take a dim view of tax avoidance schemes.

Ok a composite company is very normal for buildingsite workers. You DP will pay a fee which does vary from Compaany to company. This fee makes him a shareholder of the company for one week. He will be paid all his hours at minimum wage, and the remainder of his money as share dividends. this means he will pay a lower rate of tax for minimum wage. and corporation tax on his dividends. He should be claiming his mileage and other expenses as what he claims for will become a tax free section of his wages. rather than getting the actual money back for his expenses. Mileage should be at 40 pence per mile. al his workwear can also be claimed for.

Holiday pay is usually deducted and either paid back on the same payslip or accrues in an account until requested.

I know you need to be mastermind to understand the payslips. If I can help any further just post again.

I work at a recruitment agency and have to answer these queries a lot

On my way out now will check back later or tomorrow. Do you know which composite he is working through??

Also for you information the IR will eventually close the loophole for composites but at the moment it is still beneficial.