Legal Issue

[iceman911]

Hi,

Can some one help with a question regarding Employer National Insurance
contributions.
I know this seem s to be a common deduction, but is it legal??



thanks

[MrRobin]

Is what legal? That your company/umbrella company is paying them out of the money your earn from contracts? Who else do you think is going to pay them??!

Are you a Troll?

[Ardesco]

Part of the reason contractors earn more than permies, we have to pay the employers NI as well as the employee's NI on money we take as salary.

[Denny]

Hi,

Can some one help with a question regarding Employer National Insurance
contributions.
I know this seem s to be a common deduction, but is it legal??

thanks

Yes, but it shouldn't be deducted from freelancer fees if they aren't actually employing anyone. If you are brollied you are the one being employed. If you were a sole trader then you wouldn't be paying it.

[NotAllThere]

If you're working for a brolly, you can't think of the contract rate, £x a day, as "your rate". Hence ERNIC is not a deduction from your money. The brolly charge the agency £x a day for supplying you, the brolly employee, to the client.

The brolly deduct from the contract rate their profit. y = x - brolly_profit
They then deduct any expenses, you may be claiming. z = y - expenses.
From z, they calculate how much salary they can pay, including the amount they need to pay the erNIC, so that: your_net_income+ paye_deductions + eenic + ernic = z.
They then pay you your_net_income+ expenses.

This is how it works overall; the actual weekly calculation may well be different, with "holiday fund" etc. You can see that as the fees for a week or month vary, and as your expenses vary, so will your_net_income.

This is pretty much how a ltdco contractor in IR35 does it (except he gets a 5% allowance).

A consultancy company will do the same with their employers, only they fix the salary, and their profit varies according to fees and expenses. This is how a ltdco contractor outside of IR35 does it. But usually with a lower salary, taking dividends fro the profit.