Agency charging 12.5% - Apprenticeship Levy

[Old Greg]

Er's NIC = Employers NIC

So, 12.5% is NOT Apprenticeship Levy. in fact, doing the calculations, you're not paying any Apprenticeship Levy at all.
£430 a day gross would be £94,600 on a 220 day year.
Employer NICs on that would be £11,892.29.
Divide that down and you get £54.06 per day in Employer NICs.
Take that off your £430 and you end up with £375.94

So I think the OP has fallen into the trap of forgetting that Employers' NIC needs to be deducted from the rate.

[WTFH]

Truth be told, I don't understand what the agency is telling me...
I'm unsure what to ask the agency to make this clearer, but will ask specifically about the breakdown of the 12.5% (which is in addion to the NIC and PAYE tax)

There are two types of NICs - Employer and Employee.

The 12.5% is made up of Employer NICs but not Employee NICs.
Employee NICs and PAYE tax are taken separately from Employer NICs

Perhaps ask them simply to provide a breakdown of the figures. Don't mention NIC, PAYE, tax, Apprentice Levy or anything else. Just ask them to give you the breakdown.

[madame SasGuru]

Truth be told, I dont understand what the agency is telling me. Apologies if this is all bitty.
I've copied below a response from the agency :

The 12.5% deduction is the difference between the rate agreed in your contract and the higher rate on which we should be paying VAT (if applicable, i.e. your company is VAT registered).

The PAYE tax and NIC are the tax deductions we are required to make prior to making payment due to the new legislation for public sector contractors viewed as inside IR35.

The PAYE tax and NIC deductions are calculated on the pay rate agreed in your contract, and are based on tax information provided by yourself and HMRC.

I'm unsure what to ask the agency to make this clearer, but will ask specifically about the breakdown of the 12.5% (which is in addion to the NIC and PAYE tax)

That 12.5% is gibberish as WTFH states ask them for a breakdown of the calcuation starting from the £430 you were supposed to receive.

Technically if the contract was advertised as inside IR35 the rate you receive should be the rate that was advertised - Employers NI should have been deducted by the agency out of what they are charging the customer, not out of your £430 a day. The amount you receive will however have employee NI and Income tax deducted and either paid by the agency to HMRC (if they have employed you) or paid on behalf of your limited company if you still have a limited company.

[OrangeJuice]

Er's NIC = Employers NIC

So, 12.5% is NOT Apprenticeship Levy. in fact, doing the calculations, you're not paying any Apprenticeship Levy at all.
£430 a day gross would be £94,600 on a 220 day year.
Employer NICs on that would be £11,892.29.
Divide that down and you get £54.06 per day in Employer NICs.
Take that off your £430 and you end up with £375.94

Below is a copy of one of the remittance notes, does the above tally ?

Hrs/Days Type Rate (£) Amount (£)
4.00 Daily Standard Rate 430.00 1,720.00
5.00 Daily Standard Rate 430.00 2,150.00
5.00 Daily Standard Rate 430.00 2,150.00
5.00 Daily Standard Rate 430.00 2,150.00
5.00 Daily Standard Rate 430.00 2,150.00
PAYE Tax -2,692.46
NIC Employee -474.00
12.5% Deduction -1,290.00


Total before VAT (£) 5,863.54

[northernladuk]

We need Lucy. She loves talking about Employers NIC.

[WTFH]

Below is a copy of one of the remittance notes, does the above tally ?

Hrs/Days Type Rate (£) Amount (£)
4.00 Daily Standard Rate 430.00 1,720.00
5.00 Daily Standard Rate 430.00 2,150.00
5.00 Daily Standard Rate 430.00 2,150.00
5.00 Daily Standard Rate 430.00 2,150.00
5.00 Daily Standard Rate 430.00 2,150.00
PAYE Tax -2,692.46
NIC Employee -474.00
12.5% Deduction -1,290.00


Total before VAT (£) 5,863.54

Back of a fag packet, yes, that looks about right. Tax, NICs and other deductions are generally based on an annual salary which is then divided down by 12. When someone quotes a daily rate, then the annual salary is not fixed. Also, without knowing your tax code, if you are repaying any student loans, your NIC class, etc, then any calculation you or I do is based on assumptions.

As I said above, perhaps ask them to provide you with a breakdown, do not tell them various things you think you want to hear, just ask them to give you a breakdown of your pay.

[OrangeJuice]

What I dont understand is why the '12.5% Deduction -1,290.00 ?

[WTFH]

What I dont understand is why the '12.5% Deduction -1,290.00 ?

Have you ignored everything I've said?

They told you it was Employers NICs.

Please read posts 10, 11, 12 & 13

https://forums.contractoruk.com/acco...ml#post2567072

[malvolio]

Have you ignored everything I've said?

They told you it was Employers NICs.

Please read posts 10, 11, 12 & 13

https://forums.contractoruk.com/acco...ml#post2567072

Except ErNICs are 13.8%...?

Anyway, I would be asking for breakdown of "deductions". It could be the OP's contribution to the agent's Jaguar for all he knows...

[Old Greg]

What I dont understand is why the '12.5% Deduction -1,290.00 ?

Are they charging a 12.5% fee?