Why am I paying Employers NI?

[lucyclarityumbrella]

ERS is 13.8% above the secondary threshold (£758.00 per month), then 2% above the Upper Earnings Limit if applicable (£4189.00 per month), all based on the reverse calculation for the taxable salary from the assignment rate.

[Protagoras]

Thanks, Hmmm I wonder what's going on - another month my income was £8700 and the employers NI was £947.31 - how did that happen if it's 0% above £4189 threshold?

It's not 0% above £4189, 'rate' is still 13.8%.

£8700 fee income gives gross salary of £7622.58

£7622.58 less £758 (Lower Earnings Limit) gives £6684.58, and 13.8% of this is £947.31

[eek]

Thanks, Hmmm I wonder what's going on - another month my income was £8700 and the employers NI was £947.31 - how did that happen if it's 0% above £4189 threshold?

Employer NI is 13.8% on everything above £175 a week.

[Olly]

I put this into my model for monthly umbrella income and the results were as follows

Gross Contract Income	£ 6,525.00
Holiday Pay	£ 188.65
LLW Salary	£ 1,792.50
Bonus Salary	£ 5,531.03
Gross Total Salary	£ 5,719.69
Apprenticeship Levy	£ 28.60
Employer NI	£ 684.71
Employee NI	£ 593.22
Umbrella Margin	£ 92.00
Total NI + Apprentice	£ 1,306.53
Bonus Pension	£ -
Total Pension	£ -

The Employer's NI calculated as follows ...

	Employer NI
	From	To	Rate	Differential	Amount	Tax
Lower Earnings Limit	£ -	£ 758.00	0.00%	0.00%	£ 5,719.69	£ -
Secondary Threshold	£ 758.00	£ 4,189.00	13.80%	13.80%	£ 4,961.69	£ 684.71
Upper Limit	£ 4,189.00		13.80%	0.00%	£ 1,530.69	£ -
						£ -
						£ 684.71

Thanks, Hmmm I wonder what's going on - another month my income was £8700 and the employers NI was £947.31 - how did that happen if it's 0% above £4189 threshold?

[eek]

PS - This has nothing to do with being 'inside' IR35 or otherwise. The calculation is the same for folks working 'outside' IR35 and being paid via an umbrella company.

It's true for anyone being paid by PAYE - it's just that if you are an employee the Employer NI side of things is hidden from you...

[Protagoras]

I'm a bit confused (for a change)
I was told on here that inside IR35 I should expect an apprenticeship levy of 0.5% and Employer's NI of 13.8% - so a total of 14.3%

PS - This has nothing to do with being 'inside' IR35 or otherwise. The calculation is the same for folks working 'outside' IR35 and being paid via an umbrella company.

[Protagoras]

I'm a bit confused (for a change)
I was told on here that inside IR35 I should expect an apprenticeship levy of 0.5% and Employer's NI of 13.8% - so a total of 14.3%
My income was £6525 with an umbrella margin of £92 leaving £6433.
The employer's NI the umbrella deducted was £684.71 and the levy £28.6
That looks like 10.6% NI not 13.8%
What am I doing wrong please?

I put this into my model for monthly umbrella income and the results were as follows

Gross Contract Income	£ 6,525.00
Holiday Pay	£ 188.65
LLW Salary	£ 1,792.50
Bonus Salary	£ 5,531.03
Gross Total Salary	£ 5,719.69
Apprenticeship Levy	£ 28.60
Employer NI	£ 684.71
Employee NI	£ 407.53
Umbrella Margin	£ 92.00
Bonus Pension	£ -
Total Pension	£ -

The Employer's NI calculated as follows ...

	Employer NI
	From	To	Rate	Differential	Amount	Tax
Lower Earnings Limit	£ -	£ 758.00	0.00%	0.00%	£ 5,719.69	£ -
Secondary Threshold	£ 758.00	£ 4,189.00	13.80%	13.80%	£ 4,961.69	£ 684.71
Upper Limit	£ 4,189.00		13.80%	0.00%	£ 1,530.69	£ -
						£ -
						£ 684.71

[eek]

I'm a bit confused (for a change)
I was told on here that inside IR35 I should expect an apprenticeship levy of 0.5% and Employer's NI of 13.8% - so a total of 14.3%
My income was £6525 with an umbrella margin of £92 leaving £6433.
The employer's NI the umbrella deducted was £684.71 and the levy £28.6
That looks like 10.6% NI not 13.8%
What am I doing wrong please?

There is an allowance of £175 a week before the 13.8% is taken off and it's also a reverse calculation as it's 13.8% of your salary and you salary is only known once the employer ni & apprenticeship levy is deducted

The end calculation (from memory looks something like)

salary=6433+(weeks*24.15)/1.143
employer NI=salary*0.138
apprenticeship levy=salary *.005

that £24.15 is a trick (and I may have it slightly wrong) to fix the employer NI allowance

[Olly]

I'm a bit confused (for a change)
I was told on here that inside IR35 I should expect an apprenticeship levy of 0.5% and Employer's NI of 13.8% - so a total of 14.3%
My income was £6525 with an umbrella margin of £92 leaving £6433.
The employer's NI the umbrella deducted was £684.71 and the levy £28.6
That looks like 10.6% NI not 13.8%
What am I doing wrong please?

[eek]

Hi all,

Sorry to jump in, but noticed the sticky thread and am in need of some advice.

Could anyone explain (in very simple terms) why when I try to calculate employers NIC I cant get the same figure as my umbrella does?

I am taking the gross pay (after margin and apprenticeship levy etc) and multiplying by 0.138 (for 21-22 tax year), but this is about a hundred pounds off what the umbrella states?

Could some help me understand what is happening here, as it seems similar for a few umbrellas.

Thanks in advance!

When you say off - do you mean they are deducting less than 13.8% or more than 13.8%

as don’t forget you don’t pay any employer no on the first £175 a week