salary vs contracting rate comparison

[AlfredJPruffock]

However as an umbrella user you are funding employers and employees NICs as well as all your own costs out of your gross income and paying fees to a third party to do the (largely trivial) paperwork for you

I have always found that concept difficult to digest - if via an Umberella Company you pay both employee and employer NI - then are you an emploer . an employee - or both ?

[malvolio]

You're an employee of the umbrella. It's just they don't contribute anything other than admin, and you pay for that as well.

Get your own company, it's the only sensible option these days.

[AlfredJPruffock]

You're an employee of the umbrella. It's just they don't contribute anything other than admin, and you pay for that as well.

Get your own company, it's the only sensible option these days.

Aye Malvolio

Thanks for your, as ever, sage advice - yes much to be said for the Ltd option these days.

[stuart_75]

I'd bin the car/fuel card as that is for employees and push the rate up to compensate for using my own vehicle..

I dont think they will go any higher. They have just took a friend of mine on at £250 and he is supplying his own vehicle. I dont have car at the moment that I want to stick loads of miles on (its only a short term contract) so I thought getting the client to provide one would suit me well.

[expat]

However as an umbrella user you are funding employers and employees NICs as well as all your own costs out of your gross income and paying fees to a third party to do the (largely trivial) paperwork for you

I have always found that concept difficult to digest - if via an Umberella Company you pay both employee and employer NI - then are you an emploer . an employee - or both ?

No. You are an employee, and the umbrella company is the employee is the employer. As employer, the umbrella pays employer NI.

But where do they get the money to pay that? From your rate, of course. As a result, what is left to pay your salary is less than your contract rate.

[AlfredJPruffock]

No. You are an employee, and the umbrella company is the employee is the employer. As employer, the umbrella pays employer NI.

But where do they get the money to pay that? From your rate, of course. As a result, what is left to pay your salary is less than your contract rate.

Aye Expat

So what is there to stop Widget Company XYZ who has thirty machine operatives from deducting employer and employee NIs from their wageslips a la Umberella Mode ?

[malvolio]

Aye Expat

So what is there to stop Widget Company XYZ who has thirty machine operatives from deducting employer and employee NIs from their wageslips a la Umberella Mode ?

They do. That's how PAYE works....

[MPwannadecentincome]

Expenses aren't income. Don't fool yourself that they are. Subsistence is only applicable if you are working more than 10 hours a day away from home, so also not income. Plus you can't claim money you haven't spent and don't let anyone tell you differently (and watch the news, HMRC are about to land heavily on umbrellas with "interesting " expenses policies)

However as an umbrella user you are funding employers and employees NICs as well as all your own costs out of your gross income and paying fees to a third party to do the (largely trivial) paperwork for you. Employees only have to pay employees NICs and are not liable for expenses or employers NICs (nor holidays, sickpay or training come to that) and tend not to be charged by their empoyers for letting them work there.

End result is you might earn more net pay, but you are actually retaining far less of your gross than any other option. Sad, isn't it...

Ok but how to you compare this on an equal basis? For the same gross cost to the employer or client, the brolly employee is going to pay less tax overall surely as the brolly employee can use more expenses to offset againt the (employer and employee) NI deductions as well as tax deductions, the only time the permie employee wins over a brolly employee surely is when the brolly employee has zero expenses - at least for today's rules - if HMRC crack down then of course the situation may change.