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Why am I paying Employers NI?

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  • Lost It
    replied
    Originally posted by Lost It View Post
    Well I have to admit going "Umbrella" was a shock to my take home pay but I have two quotes from two different companies now. One "quotes" for 36 hours at minimum rate (which is wierd because I'm on day rate) and the other quotes for 48 hours which make a difference in take home pay of almost £50 more for some reason which makes no sense to me as there are three different tax regimes in place anyway. The "minimum wage" tax rate of zero, the intermediate tax rate of 20% and in my case the higher rate of 40% too.

    But the net effect is that I "lose" about 40% off the top line. Now this is shocking... So I will be seeking a much higher base rate in future, and I think, honestly that the Building Industry is about to become very expensive...
    Not happened yet. But it's going to have to happen.

    Oops. Wrong quote...

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  • eek
    replied
    Originally posted by jamesbrown View Post

    I think this is defined in legislation. As I recall, the Off-Payroll Working Rules (ch 10) and IR35 (ch 8) take precedence over CIS. In other words, I'm surprised this is a "big issue".
    Which was fine until this year when the reverse VAT scheme was introduced into the CIS legislation.

    As someone has pointed out over on LinkedIn - HMRC now a group of fiefdoms none of whom are talking to each other as they implement fixes to their problems using whatever tools are available to steal from in other departments.

    Hence the VAT fiefdom uses CIS to combat construction VAT fraud without realising that IR35 trumps / overrides it on the NI side of things.

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  • jamesbrown
    replied
    Originally posted by lucyclarityumbrella View Post
    Biggest issue, is which comes first CIS or IR35, some end clients are choosing "IR35" first, which then adds more complications to the agency who then sit within the new reverse charge VAT scheme, which the umbrella does not - causing choas!
    I think this is defined in legislation. As I recall, the Off-Payroll Working Rules (ch 10) and IR35 (ch 8) take precedence over CIS. In other words, I'm surprised this is a "big issue".

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  • lucyclarityumbrella
    replied
    Biggest issue, is which comes first CIS or IR35, some end clients are choosing "IR35" first, which then adds more complications to the agency who then sit within the new reverse charge VAT scheme, which the umbrella does not - causing choas!

    Leave a comment:


  • eek
    replied
    Originally posted by ladymuck View Post

    CEST? I thought it was CIS?
    my mistake it is CIS oops

    but the rest stands, the building trade has its own scheme and it’s not the typical IR35 one

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  • ladymuck
    replied
    Originally posted by eek View Post
    The building industry has had its own version of IR35 for a decade. It’s called CEST and while it changed slightly in April it won’t have a significant impact

    a far bigger one is that demand for building work is through the roof so wages have increased 30-40%
    CEST? I thought it was CIS?

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  • eek
    replied
    The building industry has had its own version of IR35 for a decade. It’s called CIS and while it changed slightly in April it won’t have a significant impact

    a far bigger one is that demand for building work is through the roof so wages have increased 30-40%
    Last edited by eek; 22 April 2021, 11:15. Reason: Getting the name right

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  • Lost It
    replied
    Well I have to admit going "Umbrella" was a shock to my take home pay but I have two quotes from two different companies now. One "quotes" for 36 hours at minimum rate (which is wierd because I'm on day rate) and the other quotes for 48 hours which make a difference in take home pay of almost £50 more for some reason which makes no sense to me as there are three different tax regimes in place anyway. The "minimum wage" tax rate of zero, the intermediate tax rate of 20% and in my case the higher rate of 40% too.

    But the net effect is that I "lose" about 40% off the top line. Now this is shocking... So I will be seeking a much higher base rate in future, and I think, honestly that the Building Industry is about to become very expensive...
    Last edited by Lost It; 22 April 2021, 10:53.

    Leave a comment:


  • eek
    replied
    Originally posted by NickW View Post

    How wrong you have turned out to be! ComputerWeekly.com: IR35 reforms: Confusion over who pays employers’ NI leaves IT contractors out of pocket.
    https://www.computerweekly.com/news/252498279/IR35-reforms-Confusion-over-who-pays-employers-NI-leaves-IT-contractors-out-of-pocket
    That's a very badly written article on a topic that I've covered recently elsewhere so I'm not going to repeat here.

    Basically I think there may be a case in some circumstances but unless the agency was taking kickbacks I suspect there won't be enough money to pay the amount you hope to claim.

    However, if he agency has been clear that there is an uplift for using an umbrella or provided the key information document that has been required since April 2020 I believe everything has been done correctly so you won't have a chance
    Last edited by eek; 6 April 2021, 21:14.

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  • Jumper
    replied
    Really can’t see how there can be confusion and a claim against umbrella companies. Will be interesting to see how this develops but I can’t see how there is a claim.

    Leave a comment:

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