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.
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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.Leave a comment:
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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?Leave a comment:
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Legal Issue
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
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