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Umbrella Employers NI

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    #21
    You are confusing a number of strands that although related, are determined by different rules.

    If you are in the private sector, inside IR 35, then there is a requirement for whichever entity is handling the payroll (umbrella or your own limited) to deduct the full amount of tax, em'ee and em'er NIC and pay this over to HMRC.

    If this is your limited, then strictly (in law) it's not PAYE although it is calculated that way.

    You then need to look at your contract.

    Your end client may have decided to pay you say £400 a day, all in. That is their budget and is what they are prepared to pay. From that the umbrella will deduct the tax and NIC and their fees. You are left with the net.

    You may have negotiated a position whereby the end client is paying £400/day plus Em'er NIC.

    That is presently not an industry standard contract, but I suspect will become so soon.

    If so, then the end client may pay you say £350/day and pay the em'er NIC either directly to HMRC or to the umbrella to manage for them.

    This industry has for a long time (a generation or more) looked at the gross day rate and worked back.

    I suggest that has to change and instead you need to think about what you would like net of tax and all NIC and then calculate what the gross rate should be.

    The end client may find the answer acceptable or not. If not, you are in a commercial negotiation around how much the end client wants you and how much you want the job.
    Best Forum Adviser & Forum Personality of the Year 2018.

    (No, me neither).

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      #22
      Originally posted by Vincenth1 View Post
      If the client/umbrella try to charge that amount, you may have a claim against them for unlawful deduction of wages.
      It is down to the detail unfortunately, and how this is portrayed to you. Employers NI is deemed to come from the contract rate before the taxable salary is calculated. The rates advertised must be the Contract Rate and not your taxable salary.

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        #23
        Originally posted by lucycontractorumbrella View Post
        . Employers NI is deemed to come from the contract rate before the taxable salary is calculated. .
        I'm not sure that is in alignment with the IR35 rules as they stand today.

        It may be that the employment agency rules and the tax rules are not aligned (shocker).

        I am of the view however that the traditional way in which day rates and deductions are shown, does not help in making things clear to contractors.
        Best Forum Adviser & Forum Personality of the Year 2018.

        (No, me neither).

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          #24
          Originally posted by webberg View Post
          It may be that the employment agency rules and the tax rules are not aligned (shocker).
          Try adding contract law to it too

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