Reply to: Offer - inside IR35 question

[CompoundOverload]

It gets better....

I asked what the salary sacrifice options were. Apparently the only pensions they offer are NEST (they do not allow private pension contributions).

NEST seems a crock of tulip to be honest. They don't take it out of the gross pay either *facepalm*

[eek]

It's mentioned (Employers NI) under the "Deductions from your wage required by law" section.

But as you say, it is a mess and it is an odd model they are using.

What is mentioned there is employee's NI (which you as an employee pay as part of your NI bill).

Income Tax
Employee’s National Insurance
Student loan repayment, if relevant
Any ‘Attachment of Earnings Order’ issued by the Courts

This really is a hideous no man's land that doesn't give you either the full assignment rate (useful for salary sacrifice options) nor a standard PAYE contract.

[CompoundOverload]

It's mentioned (Employers NI) under the "Deductions from your wage required by law" section.

But as you say, it is a mess and it is an odd model they are using.

[eek]

well it is a KID and it does show that they are deducting holiday pay and haven't mentioned Employers NI at all so they won't be able to deduct that later.

But it's a mess as they've created a pay scheme that doesn't exist in the real world and I would have thought Hayes were better than that.

[CompoundOverload]

KID doc came through:

Deductions from your pay required by law:

Income Tax Employee’s National Insurance Student loan repayment, if relevant Any ‘Attachment of Earnings Order’ issued by the Courts

Holiday entitlement and pay:

28 days per year inclusive of bank holidays, unless specified otherwise in the Assignment Confirmation Letter issued for a specific assignment

EXAMPLE PAY STATEMENT

Example rate of pay:	For illustrative purposes only, this includes a calculation based on a premium rate of £10 per hour and 35 hours per week = £350
28 days holiday pay accrued to be paid back when you are on leave. Taxes are applied at point of payment 28 days holiday divided by 260 working days a year (excluding weekends) = 10.77%	Holiday pay is accrued at 10.77%, which for £10 = £1.08 accrued holiday pay for every hour worked £10 - £1.08 leaves a working rate of £8.92 per hour, which at 35 hours = £312.20, plus £37.80 accrued holiday pay
Deductions from your wage required by law:	Income tax (over £240 x 20%) = £14.44 Employees National insurance (over £183 X 12%) = £15.50
Any other deductions or costs from your wage:	Auto enrolment workplace pensions after 12 weeks service is 5% of earnings over £192 after tax/NI deductions (£280.22 -192 = £4.41)

Example net take home pay:

Net pay is equal to = £282.26

[TwoWolves]

Good Lord, what have they done to us?

[eek]

So I've received the KID (Temporary Workers Useful Information).

https://www.hays.co.uk/documents/346...dbook+2019.pdf

It gives an explanation of the working rate and rate explanation, which I'm seeing makes a bit more sense now.

That's not a KID - it should be 2 pages max in length.

[CompoundOverload]

So I've received the KID (Temporary Workers Useful Information).

https://www.hays.co.uk/documents/346...dbook+2019.pdf

It gives an explanation of the working rate and rate explanation, which I'm seeing makes a bit more sense now.

[eek]

They said the deduction goes into a pot that I take from whenever I take annual leave or if I don't then the pot is then given back to me.

Um - again this makes no sense.

Has the agency sent you the Key Information Document they legally need to send you explaining how you get paid and what your take home pay will be.

And there are really only 2 rates that the agency can offer:-

PAYE rate if you are being paid directly via the agency. If you are being paid via PAYE than you are entitled to paid holidays at the equivalent of 28 days a year.

Assignment rate - which is HMRC's new preferred name for Smurf / Umbrella rate. This is the rate the agency pays the umbrella from which:-

Holiday pay
Employer NI
Apprenticeship Levy
Employer Pension contributions
Umbrella fees

Need to be deducted before the umbrella starts paying you. That premium rate isn't enough to cover those costs...

[DrStrange]

That wasn't my experience, I was quoted a daily rate which was GROSS of those deductions, therefore I was paying it , in my view. My accountant seems to agree also, they said that the daily rate should be NET of Employers NI and agency fees.
Last edited by Scoobos; Yesterday, 14:16.

(Sorry, I couldn't find the "quote" button)


The agencies are quoting the "assignment rate" (or "smurf rate" if you prefer). It's not a "real" rate as we would know it; they do it to get your attention and to try to hide the fact the rate to you is 25% lower than they're advertising, after ENIC and holiday pay is taken off.

At the end of the day, no one else is going to pay ENIC, AL, Holiday Pay so it has to come out of your rate, so the key is know exactly what's being offered before you sign up to anything, and to increase "your rate" as much as possible to reduce the impact (I.e. "make them pay the ENIC" by increasing the "rate")

[Scoobos]

So stand corrected. The fee from the client includes all the necessary overheads for the engagement or, to put it another way, that initial fee will be reduced by the statutory and commercial deductions in the supply chain - holiday pay, agency fee, NICs (both), PAYE, AL if applicable) and umbrella fees included. The worker is not paying anything from post-tax income and Employer's NIC has been taken out before his taxable income is calculated and necessary deductions made.

OK, there are subtleties but that is the basic position. It's as well we understand it.

Thanks Malvolio,

That wasn't my experience, I was quoted a daily rate which was GROSS of those deductions, therefore I was paying it , in my view. My accountant seems to agree also, they said that the daily rate should be NET of Employers NI and agency fees.

[vetran]

They said the deduction goes into a pot that I take from whenever I take annual leave or if I don't then the pot is then given back to me.

If that is so and its a personal pot it then seems reasonable. Need to return the pot at the end of your financial year.

[CompoundOverload]

OK so they are taking £100 a day to pay you £560 a day holiday pay. Is every sixth day going to be Holiday?

They said the deduction goes into a pot that I take from whenever I take annual leave or if I don't then the pot is then given back to me.

[malvolio]

The whole situation this year with IR35 and agency provided payroll is illegal imo.

No matter how they phrase it , you are paying Employers NI as an employee - if the daily rate you are given is then subject to these deductions after payment.

(I'm not a solicitor, so stand to be corrected)

So stand corrected. The fee from the client includes all the necessary overheads for the engagement or, to put it another way, that initial fee will be reduced by the statutory and commercial deductions in the supply chain - holiday pay, agency fee, NICs (both), PAYE, AL if applicable) and umbrella fees included. The worker is not paying anything from post-tax income and Employer's NIC has been taken out before his taxable income is calculated and necessary deductions made.

OK, there are subtleties but that is the basic position. It's as well we understand it.

[Scoobos]

The whole situation this year with IR35 and agency provided payroll is illegal imo.

No matter how they phrase it , you are paying Employers NI as an employee - if the daily rate you are given is then subject to these deductions after payment.

(I'm not a solicitor, so stand to be corrected)