Employer's ni contribution from employee's salary.

**LisaContractorUmbrella** · 1 December 2011, 09:27

Originally posted by Newcomer View Post

Hi, I have a quick question. I work as a contractor for a company through another limited company run by an individual where I am a permanent employee. The contracting company pays a rate..lets call it x, and my company gives me y rate after deducting it's cut. Now when I get my salary the employers NI contribution is still coming from my salary which I think is wrong. I believe they should be paying employer's ni from their pocket. Is my assumption correct?

Who do you actually perform the work for - the company that pays you or another company?

**Clare@InTouch** · 1 December 2011, 11:32

Originally posted by Newcomer View Post

Hi, I have a quick question. I work as a contractor for a company through another limited company run by an individual where I am a permanent employee. The contracting company pays a rate..lets call it x, and my company gives me y rate after deducting it's cut. Now when I get my salary the employers NI contribution is still coming from my salary which I think is wrong. I believe they should be paying employer's ni from their pocket. Is my assumption correct?

For a normal employee, the employer would indeed pay the Employer NI. It depends on your agreement with the company you're employed by, and your reasons for going through that company. If it's to act as a middle man so you can work for the client then they are effectively acting as an umbrella and it's more logical that they deduct the NI from you, otherwise they'd be out of pocket. For example:

Client pays £1,000

Your gross wage £850
Employers NI £150

That way it's cost your employer nothing to employee you, as you're paying the extra NI. The extra they deduct from you is effectively their fee for acting as an umbrella.

Why is it done this way rather than you going payroll through an agency, umbrella or limited yourself?

**Newcomer** · 1 December 2011, 12:04

Originally posted by LisaContractorUmbrella View Post

Who do you actually perform the work for - the company that pays you or another company?

I actually perform the work for another company. Not the one that pays me.

**Newcomer** · 1 December 2011, 12:19

Originally posted by Clare@InTouch View Post

For a normal employee, the employer would indeed pay the Employer NI. It depends on your agreement with the company you're employed by, and your reasons for going through that company. If it's to act as a middle man so you can work for the client then they are effectively acting as an umbrella and it's more logical that they deduct the NI from you, otherwise they'd be out of pocket. For example:

Client pays £1,000

Your gross wage £850
Employers NI £150

That way it's cost your employer nothing to employee you, as you're paying the extra NI. The extra they deduct from you is effectively their fee for acting as an umbrella.

Why is it done this way rather than you going payroll through an agency, umbrella or limited yourself?

hmm. I am going through them because they are the one who has got me the job interview. Usually umbrella companies charge around £100 per month (I think) to run your payroll. Please correct me if I am wrong. All this company ever does is to run payroll after I cleared the interview but they earned at least 8 times each month!! than the usual amount from me. Its my stupidity to not to realize this earlier but I was too busy with work to concentrate on these things. Now I am looking to start on my own limited company. I am still researching on who to join for my accounting needs at this point.
All your suggestions and help greatly appreciated.

**SueEllen** · 1 December 2011, 19:08

Originally posted by Newcomer View Post

I am still researching on who to join for my accounting needs at this point.
All your suggestions and help greatly appreciated.

How about the person who gave you detailed advice on this thread?

Employer's ni contribution from employee's salary.