Employees and Employers NI

[drittz]

Just got hit with paying both of these NI taxes working through an Umbrella company. Is paying Employers NI going through an Umbrella company something that has been introduced within the last 3 years or so as I can't remember paying this last time I was a contractor. Seems like contracting is becoming less attractive than I remember.

[northernladuk]

You could argue working through an Umbrella is not contracting as you are employed by the brolly but lets leave that one

Speak to your Umbrella about any issues first as they are your employer and should manage it all for you. If they still can't answer your question to your satisfaction you could post a thread in the Umbrella section of the forum to see if Lisa can help.

EDIT : Does this help?

http://www.contractorumbrella.com/employers_nic.html

EDIT 2 : Or this?

http://www.sjdaccountancy.com/about/..._home_pay.html

National Insurance Savings
With an umbrella company you will pay both employees and employers NI (Employers NI is 13.8% of your salary, and employees NI 12% for the first £770 a week, and 1% thereafter (both after tax free personal allowances).

[TheCyclingProgrammer]

All employers have to pay employers NI contributions. The main difference between a normal permie job and contracting through an umbrellas is that in a permie job, employers NI is something your employer pays on top of your salary (e.g. if you're salary is £20k, then only employees NI and income tax will be deducted) whereas an umbrella will deduct it from your rate when they pay you.

[expat]

Just got hit with paying both of these NI taxes working through an Umbrella company. Is paying Employers NI going through an Umbrella company something that has been introduced within the last 3 years or so as I can't remember paying this last time I was a contractor. Seems like contracting is becoming less attractive than I remember.

Somebody has to pay it. Where do you think the money comes from to pay it, the tooth fairy?

[Old Greg]

Just got hit with paying both of these NI taxes working through an Umbrella company. Is paying Employers NI going through an Umbrella company something that has been introduced within the last 3 years or so as I can't remember paying this last time I was a contractor. Seems like contracting is becoming less attractive than I remember.

No change AFAIK. Time to go Ltd or are you absolutely sure you are inside IR35?

[LisaContractorUmbrella]

Just got hit with paying both of these NI taxes working through an Umbrella company. Is paying Employers NI going through an Umbrella company something that has been introduced within the last 3 years or so as I can't remember paying this last time I was a contractor. Seems like contracting is becoming less attractive than I remember.

An umbrella company will employ you under a Contract of Employment which gives you the Statutory entitlements of any other employee. They will then enter into a business to business contract with the agency or end client and will raise invoices for the work that you've done on a weekly or monthly basis. The agency/client will pay the umbrella company and the umbrella company will pay you. As with any other employer, umbrella companies have a legal obligation to pay Employer's National Insurance contributions which they will do on a monthly basis, they will also retain a margin from the funds received which is their revenue for the administrative work that they do. The money that's left from the invoice receipt is your salary and is subject to income tax and employee's national insurance contributions in the same way as any other employment.

[Andrew@Wisteria]

No change AFAIK. Time to go Ltd or are you absolutely sure you are inside IR35?

Can be profitable to register a Ltd Co. even if inside IR35 (register for flat rate VAT, get more generous expenses allowed)

The amount saved in tax needs to make the extra admin worthwhile.

If you are contracting via Umbrella then end client should be paying at a rate that at least covers the Er's NI - IMO.