Paystream - admin charge out of Gross pay and not Total umbrella income

[Mikexx]

Why do PayStream do this so I pay Employer's NI, Employees NI and Income Tax on this fee?

I have asked why this is the case and I wasted 45 minutes talking to a belligerant representative whose English was not her first language who couldn't tell me why, apart from that my contract with PayStream said they could.

Obviously I would prefer this "Admin Charge" to come out of my total umbrella income, like the Paystream Service fee and the pension salary sacrifice.

The representative pointed to PayStream's "Salary Sacrifice Contractor FAQs", where in "Participating in a salary sacrifice scheme", It says:

"We do apply a small charge to cover the administration of deducting and setting up the payments to your provider but we will pass on the full employer’s NI saving to you in the form of increased gross pay."

It says nothing about taking this fee out of Gross Pay, in fact suggests from claiming a "employer’s NI saving" quite the opposite.

Explanation for those not versed in such a scheme. Total Umbrella Income = pay from client after agency had taken their fee.
Gross Pay (Taxable Income) = Total Umbrella Income - Service Fee - Employers NI - Apprenticeship Levy - less Employers Pension - Less Salary Sacrifice.

The question posed to the representative: is there a statute, HMRC guide or Case law where Paystream must take their salary admin fee out of Gross rather than out of Total Umbrella Income.

I'm sure there's a reason, apart from getting the run-around from a PayStream representative who refused to accept they didn't know why.

[WTFH]

How much is this charge?

[hobnob]

The question posed to the representative: is there a statute, HMRC guide or Case law where Paystream must take their salary admin fee out of Gross rather than out of Total Umbrella Income.

I've used a few umbrella companies:
* Contractor Umbrella (£25.00/week)
* DASA Umbrella (£25.00/week)
* NASA Umbrella (£17.50/week)
* Sapphire (£27.50/week)

They all took the company margin out of the total umbrella income, so there can't be any law that says it must be taken from gross salary.

However, as WTFH said, how much is the charge? Putting that another way, what would be the equivalent charge if it was taken out of the umbrella income (but leaving you with the same amount of take-home pay)?

Edit: re-reading your original post, is the admin charge separate to the service fee? I've only paid a single company margin to each umbrella.

[Protagoras]

Edit: re-reading your original post, is the admin charge separate to the service fee? I've only paid a single company margin to each umbrella.

I read OP's post several times and in the end concluded that there are probably two fees.
(a) A service charge / company margin taken from umbrella's gross income
(b) A separate admin charge for pension payments, deducted from the worker's gross salary

In my experience, there was only one fee - the company margin - as illustrated by hobnob

[Mikexx]

Many thanks the replies.

I have one service fee out of umbrella's gross income.

I have another service (admin) fee that is out of gross paye income associated with a salary sacrifice.

I'm just wondering why the admin fee can't come out of the umbrella's gross income.

The fee is not a great deal but will be £100 p/a on which I pay Employer's NI, employees NI and income tax. These taxes will in effect double this.

[Protagoras]

Many thanks the replies.

I have one service fee out of umbrella's gross income.

I have another service (admin) fee that is out of gross paye income associated with a salary sacrifice.

I'm just wondering why the admin fee can't come out of the umbrella's gross income.

The fee is not a great deal but will be £100 p/a on which I pay Employer's NI, employees NI and income tax. These taxes will in effect double this.

I think the principle of this would annoy me more than the sum involved.

Do you have the option to switch 'employer' in which case you may have some leverage to have this fee deducted without NI or even waived?

[Mikexx]

I think the principle of this would annoy me more than the sum involved.

Do you have the option to switch 'employer' in which case you may have some leverage to have this fee deducted without NI or even waived?

You've hit the nail on the head.

If I was told this beforehand I would have taken this on the chin. Just the way it came out of the blue and with no explanation or reason why they do this.

I see no reason why the fee shouldn't come out of total umbrella income. Again if there was a reasonable explanation I could accept the charge. I suppose I was pissed by the representative who seemingly deliberately misunderstood the question, refused to answer it and then asked me to repeat the question. She promised a call by another representative but unsurprisingly that didn't materialise. Hence me posing the question here.

[WTFH]

Just re-reading your post. It is NOT a “salary admin fee”, it’s a fee to process your pension.
Your decision to use whatever pension that you chose was made by you (I think you had another thread on this). This choice of yours is not part of the total umbrella income, but your choice for after they have taken their fee from the total.

Maybe ask them if they offer a pension scheme that is fee-free, or ask your accountant/tax advisor/pension advisor if the scheme they advised you to take is complex to maintain or could be simplified.

[Mikexx]

Just re-reading your post. It is NOT a “salary admin fee”, it’s a fee to process your pension.
Your decision to use whatever pension that you chose was made by you (I think you had another thread on this). This choice of yours is not part of the total umbrella income, but your choice for after they have taken their fee from the total.

Maybe ask them if they offer a pension scheme that is fee-free, or ask your accountant/tax advisor/pension advisor if the scheme they advised you to take is complex to maintain or could be simplified.

I'm looking for an explanation why the "admin charge" can't be taken out of the total umbrella income. If the salary sacrifice can be take out of the total umbrella income then why not the "admin charge".

I don't feel I am any closer to an explanation and it's not the pension company making the charge, they already charge a fee.

[WTFH]

I'm looking for an explanation why the "admin charge" can't be taken out of the total umbrella income. If the salary sacrifice can be take out of the total umbrella income then why not the "admin charge".

Because it’s your choice. If you chose not to use salary sacrifice, then you wouldn’t pay the £8 monthly fee (or whatever the exact amount is). It is not the umbrella company that is forcing you to use salary sacrifice whatever way you have it set up, it is your personal choice.
Or, if you are able to look at it objectively, why should your personal decision be taken out of their income?