Brand new to the forum and also brand new to contracting. This will also probably be my one and only contract and I will certainly never use Parasol again as they've been very poor in terms of dealing with my issue.
The main problem that I have is that the calculator they have on their site is at best wildly inaccurate, and at worst fraudulently misleading. Based on the calculations it gave me two months ago I decided to go down the umbrella route for my 4-month assignment (in-between jobs).
So what's up then you ask?
Well, the issue is that I have taken home roughly 58% of what I have billed. And that's on a daily rate of £130 or the equivalent of £34,000 p.a. As a comparison, the Parasol online calculator says that I should have taken home about £4101 (78.5%), which is a whopping £1065 difference! In two months!!
Yes, I am as puzzled as you are.
There is two more issues that affects the numbers that I need to disclose first though.
The second issue is a little more complex. WHen I was set up, the agencie's intention was to pay me monthly but failed to provide instructions to Parasol. Parasol therefore set me up on a weekly schedule. When I subsequently billed on a monthly basis, Parasol took the payment as payment for one week only, meaning that I paid much mor employers NI than I otherwise would have. Now they are unable or unwilling to rectify this as they don't see that they have done anything wrong. But that's another issue and another thread.
- I am on emergency tax still (as I'm still waiting for my useless previous employer to sort that out).
So, the numbers.
I have worked for 8.5 weeks. In this time I have invoiced £5230 and taken home £3036 (58%). The deductions were in turn:
Gross pay: 5230 (100%)
Parasol margin: £247.50 (4.73%)
Employer cost: £532.50 (10.18%)
Tax (Paye): 1136.20 (21.72)
NI: 278.95 (5.33%)
Take home: £3036 (58%)
Now the million dollar question is of course - are those numbers even remotely correct?
Can someone who don't earn very much in the first place have so much deducted just by being tricked into going umbrella?
And is it ethical to give the illusion that you can get away with paying about 22.5% in tax on your gross income, when the reality is that you will most likely pay double that?
If you look at the numbers there you will see that an incredible 15% is deducted on the gross salary before it's even taxed (or has NI deducted)!!
Would be great to have your thoughts on this. I'm notifying Parasol that I'm leaving them tomorrow, as for the other issues (the one relating to the setting me up on a weekly schedule instead of a monthly one) I'll look into what action can be taken.