Going through an umbrella company - should I be paying EMPLOYER'S National Insurance?

From what i am aware, you are essentially an employee of them.
For you to pay employers NI you would have to be your own boss (Ltd Co).

A question - why on earth are you using an umbrella company? is your contract not worth much (under £25k or so?)?
 
Morba said:
From what i am aware, you are essentially an employee of them.
For you to pay employers NI you would have to be your own boss (Ltd Co).

A question - why on earth are you using an umbrella company? is your contract not worth much (under £25k or so?)?
Click to expand...

My agency gives no PAYE option and it's my first non-PAYE contract...So I went with an Umbrella company to 'break me in' as it were.

I have to say that it hasn't exactly been a pleasant experience in any way.

Once their 'admin fees' and employer's NI is taken off, I may as well be on something stupid like £9/hour.

Vampires. The lot of them.

*n
 
Nightmare. I had less than a month to make the decision myself, i went the Ltd Co route and got a decent accountants.
Decided that I really didnt want the umbrella company taking more money and sticking me in PAYE meaning a huge drop in wages!
 
Cybermyk - 'the agency takes a cut and the umbrella company takes a cut' doesn't really cut it (pardon the pun).

My employer (CDPCT) pays a lump sum for my services.

The agency takes their cut, leaving me with my contracted hourly rate.

The UC takes their cut as an 'administration charge'. Bloody jackals.

Then 12.8% ENI goes missing.

Then I'm paid a gross pay about £75 a week lower than what the UC receives from the agency.

Is there a concrete answer as to who should pay ENI and who it is paid to...? My payslips from the UC note me as being paid PAYE and on a 522L tax code (which the UC only sorted out last week, previously I was on an emergency tax code :/) so that means I *should* be paying only employee tax and NI, non?

*n
 
Ask the question over on contractorUK, SJDAccountants and a few other knowledgeable people post on there, should get a definitive reply :]
 
So an umbrella company is someone who is paid for you to 'be employed' by them to get round things like the IT contractors laws for example. Bloody leeches :eek:
 
In some cases its as bad as being caught by IR35 though and you still pay PAYE like a normal employee at normal rates. which is really crap.
 
I'm going through an umbrella company, it was a choice of earning £9 an hour PAYE through the agency or £11 through the umbrella company. Despite the charges, I still earn a lot more a month because of my expenses being covered and the higher hourly rate
 
Tbh, at the rate you are earning its probably not worth the effort of your own ltd co.
 
That's the thing - I'm only a small amount above that.

BLEEEH!

I only get to claim for £5/day food, £5/day for leaving before 7am and £17/week for travel.

VAMPIRES! AND JACKALS! ALL OF THEM!

...At least now we know how they afford to run Alfas and so on... ;)

*n
 
I queried this with giant when I was contracting for a few months last year.

This was their response

I hope this email finds you well and thank you for your query on the social security deductions shown on your payslips.



It is a legal requirement to pay Employees National Insurance if you are employed. The amount of contributions you have to pay will depend on whether you are an employed earner or self employed; and the amount you earn. As you are a contractor your national insurance is calculated at 11% on your basic pay, less a weekly/monthly allowance.



Employers Social Security is the National Insurance (NI) contribution that must be paid by all employers in addition to the payment NI made by their employees. In the current tax year Employers NI is calculated 12.8% less a weekly/monthly allowance.



As your employer we are required to make Employers NI contributions each time we pay your salary. These payments are a cost associated with your contract and are therefore deducted from the contract income when we calculate your profit bonus. You will see these cost clearly identified on the invoice reconciliation which can be found on the same page as your payslip in the payslip history section of your online giant portal.



I hope that has clarified the query for you but please let me know if I can advise any further.





Regards
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I work for an umbrealla corp as well. Walk to work and cant claim for food so only get £25 because Im away from home for less than 10 hours a day. Agency steals the two quid an hour from 11 to 9 and accounting agency nab about 40 a week :(
 
Morba said:
A question - why on earth are you using an umbrella company? is your contract not worth much (under £25k or so?)?
Click to expand...

Why would it have to be a lower paid contract. I'm not that familiar with Umbrella companies but most of the contractors in the aerospace industry are paid through one. Normally a flat fee £40 a week and they get away with paying bugger all tax to what they should be paying.
 
being paid via an umbrella will not stop you paying plenty of tax.
going offshore will.

the tax breaks for people earning more money is obvisouly worth more in the long run when comparing a ltd co to an umbrella.

for example:

person on £75k would take home around £51k (iirc according to the calculator), where as via a ltd co, it would be more around £63k.
Below £30k i seem to remember that the value of the tax savings being so little that it was not worth the time doing your own admin to save the additional tax.

i could be wrong though, but that is why i went for a ltd co instead of via an umbrella company.
 
I'm surprised you expected the umbrella company to pay for your ENI.

The client pays a fixed hourly/daily rate for you so they aren't going to, the umbrella company merely acts as a proxy for your contract so they aren't going to, so hence you get left with the bill. :)

Worst part about ENI is that there is no upper limit.

/edit

Morba said:
In some cases its as bad as being caught by IR35
Click to expand...
I'm looking at maybe setting up a ltd company when i return to contracting in July, do you have any experience in avoiding IR35?
 
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