Umbrella vs perm salary tax calculations

[ContractorBanking]

Is there a difference between the tax calculations of umbrella vs PAYE salary (excluding the exceptions below)?

1) umbrella deducts employers NI contributions
2) umbrella deducts apprenticeship levy
3) umbrella service fees (around £100pm)
4) salary sacrifice fees (around £30pm)

So, if perm salary is equivalent to annual Umbrella pay less the above 4 costs, would salary take home be equal to umbrella take home, assuming same pension contributions, etc?

Of course, perm salary would incur P11D for BIK but that aside, is the tax treatment the same?


thanks

[eek]

Is there a difference between the tax calculations of umbrella vs PAYE salary (excluding the exceptions below)?

1) umbrella deducts employers NI contributions
2) umbrella deducts apprenticeship levy
3) umbrella service fees (around £100pm)
4) salary sacrifice fees (around £30pm)

So, if perm salary is equivalent to annual Umbrella pay less the above 4 costs, would salary take home be equal to umbrella take home, assuming same pension contributions, etc?

Of course, perm salary would incur P11D for BIK but that aside, is the tax treatment the same?


thanks

Holiday pay

reality is that the employer NI starting point is enough to offset the umbrella’s fees. So a straightforward step of deduction 21% off the umbrella rate to work out a PAYE rate

To show the maths to get to the umbrella rate from the Paye rate you need add 13.8% employer NI, .5% levy, 12.07% holiday pay to the PAYE rate. That gives you 126.37% of the PAYE rate.

[ContractorBanking]

Thanks Eek.

Let's assume the salary is in line with the umbrella adjusted figure (as below) - does that mean the take home pay should be the approx same?

[malvolio]

It's not precisely answering your question, but this article might throw a little light on the overall factors...

[lucyclarityumbrella]

Thanks Eek.

Let's assume the salary is in line with the umbrella adjusted figure (as below) - does that mean the take home pay should be the approx same?

Yes in reality, it is the assignment rate less ERs NI, less AL, less umbrella margin would give the taxble salary, so for example an umbrella rate of £600.00 per day gives a taxable salary of £524.79 per day

[ContractorBanking]

Thanks Lucy.