Umbrella calculation - realistic estimation

[AutomationGuy]

Now CUK calculator shows complete bollocks. For same input as before, the output is now:

Employers NI: £9,157.12
Employee PAYE: £0
Employee NI: £0.00
Tax payable: £9,157.12
Umbrella Fee: £1,296
Deductions: £10,453.12
Net monthly income: £5,545.57
Net annual income: £66,546.88
Take home percentage: 86%
Current rate: £350
Monthly Umbrella fee: £1296 (this is for sure typo on the website, this is annual not monthly)
Average hours per week: 37.5
Average weeks per year: 44
Annual allowable expenses: £0
Tax code of 1060L

[lucyclarityumbrella]

They have said they are looking into it, I will chase them on Monday.

[AutomationGuy]

Hi Lucy, any luck with that?

[lucyclarityumbrella]

I have spoken with CUK about the calculator, will let you know the outcome as soon as I hear back

[ASB]

The first is assuming you are paid in 12 equal monthly instalments.

The second simply looks wrong.

I did **suspect** that it is taking 1750 as a weekly "wage" doing a payroll calculation and taking this 44 times. This will have the effect of increasing the tax and NI. This is arguably correct. And arguably not.

If nothing were earned in the other 8 weeks then one would in fact be due a tax rebate since this is based on cumulative income. NI isn't.

However if you say you only work one week in the year then you will get some truly absurd figures.

[lucyclarityumbrella]

I did my homework, but still can't get where the difference of £400pcm is coming from. Same assumptions/input was provided to both, but results are much different.

Could someone help me understand what's wrong here?

Hi, as you mentioned the varying figures come from the tax differences if annualised, which is odd since HMRC set the taxes and not the umbrella company (hence they should not differ). Is there any small print on the calculator you used... may be worth a check?

[AutomationGuy]

I don't disagree with the general principle, but can't see it is applied above. This is just a general statement, which I can't see confirmed by particular figures. Please check my previous comment: if I specify monthly or annual income, weeks pa just don't matter.

[NotAllThere]

The weeks may not matter to you, but they are taken into account in some way in the calculation. That much is obvious.

[AutomationGuy]

I don't know how you came up with this. In one example I use annual income divided by 12 from the other, as one of them accepts monthly income, and the other annual.
Number of weeks has nothing to do about that, because I don't provide remuneration per week. Only then it would come into play.

[SueEllen]

One is using 44 weeks in a year while the other is using 4.3 weeks in a month.

You need to make sure both use exactly the same time period to do a comparison.

[AutomationGuy]

Hi there, I've been permie for ages and now I'm going to hit contracting market in next few months. I decided to operate under umbrella to make things simple. What I struggle with is understanding how much net earning pcm I should expect, given particular assumptions. This should be really piece of cake, but it seems to be totally inconsistent across online calculators I've seen so far.

A) Take Home Pay Calculator : Contractor Umbrella

Monthly income: 6,416.00
Expenses: 0
Employer's NI 683.39
Employee's NI 384.98
Employee Tax 1,385.28
Total All Tax 2,453.65
CU Margin 108.50

Total Net Income 3,850.74

Considering the nature of umbrella company and monthly fee of just above £100, I expect it to give similar results to permie at £67500pa:

ListenToTaxman: gross salary of £67500 (2015 tax year) wage payslip summary - Salary Calculator 2015 / 2016 UK Tax Calculator / Income Tax Calculator from listen to taxman. HMRC Tax Self Assessment Incorporates PAYE, national insurance, tax code, pe

B) However, this calculator doesn't give same results:

Umbrella Company Tax Calculator

Total annual income: £77,000.00
Employers NI: £9,157.12
Employee PAYE: £20,199
Employee NI: £4,810.80
Tax payable: £34,167.32
Umbrella Fee: £1,296 (108*12)
Deductions: £35,463.32
Net annual income: £41,536.68
Take home percentage: 54%
Calculation based on:
Current rate: £350
Monthly Umbrella fee: £1296 (this is for sure typo on the website, this is annual not monthly)
Average hours per week: 37.5
Average weeks per year: 44
Annual allowable expenses: £0
Tax code of 1060L

Net monthly income: £3,461.39

I did my homework, but still can't get where the difference of £400pcm is coming from. Same assumptions/input was provided to both, but results are much different.

Could someone help me understand what's wrong here?