Umbrellas which offer 'Salary-Sacrifice' pensions

[SPM]

Hello All,

I am trying to find out if there are any umbrella companies offer 'Salary Sacrifice' pensions

So far only found one which is Contractor Umbrella

Parasol - Not able to get a clear answer from them.

[GhostofTarbera]

Carry them back also


https://www.contractoruk.com/forums/...-pensions.html


Sent from my iPhone using Contractor UK Forum

[northernladuk]

Speak to Lucy at the new Clarity Umbrella Home - Clarity Umbrella Ltd - UK PAYE Umbrella Company

I wouldn't be spending too much time hunting as most won't. As far as I know it's only these two.

[DolanContractorGroup]

Hello All,

I am trying to find out if there are any umbrella companies offer 'Salary Sacrifice' pensions

So far only found one which is Contractor Umbrella

Parasol - Not able to get a clear answer from them.

Thanks SPM

Yes, we, under the Contractor Umbrella brand, have been doing this for many years and our payroll team has extensive experience of it.

If there are any questions you have regarding this, please don't hesitate to get in touch.


Kind regards

Zeeshan

[VelcroPower]

Just out of interest*, how does an Umbrella company operate a salary sacrifice pension scheme?

If it's an employer contribution out of the invoice value I can understand that but most (all?) Umbrella contracts guarantee minimum wage only, then a discretionary bonus/commission on top made up of what's left after the Umbrella's deductions (expenses, NICs and employer pension contributions).

I just don't see where the "salary" is to sacrifice from or is it that in name only for ease of description?

*to massive nerds

[northernladuk]

Just out of interest*, how does an Umbrella company operate a salary sacrifice pension scheme?

If it's an employer contribution out of the invoice value I can understand that but most (all?) Umbrella contracts guarantee minimum wage only, then a discretionary bonus/commission on top made up of what's left after the Umbrella's deductions (expenses, NICs and employer pension contributions).

I just don't see where the "salary" is to sacrifice from or is it that in name only for ease of description?

*to massive nerds

I think you are misunderstanding the whole model there? There is no bonus or commission. It's PAYE out of what gross they get from the client. The payslip shows just what a permie one would.

I would have thought bonus/commission/loan payments are in the realms of schemes, not proper PAYE no?

[DaveB]

Just out of interest*, how does an Umbrella company operate a salary sacrifice pension scheme?

If it's an employer contribution out of the invoice value I can understand that but most (all?) Umbrella contracts guarantee minimum wage only, then a discretionary bonus/commission on top made up of what's left after the Umbrella's deductions (expenses, NICs and employer pension contributions).

I just don't see where the "salary" is to sacrifice from or is it that in name only for ease of description?

*to massive nerds

You are an employee of the Umbrella company and get paid via standard PAYE. If they do anything else they are not a proper Umbrella co. and are operating some sort of avoidance scheme that may or may not leave you with some serious liabilities down the line if HMRC come calling.

[DolanContractorGroup]

Just out of interest*, how does an Umbrella company operate a salary sacrifice pension scheme?

If it's an employer contribution out of the invoice value I can understand that but most (all?) Umbrella contracts guarantee minimum wage only, then a discretionary bonus/commission on top made up of what's left after the Umbrella's deductions (expenses, NICs and employer pension contributions).

I just don't see where the "salary" is to sacrifice from or is it that in name only for ease of description?

*to massive nerds

Hi VelcroPower,

So, when the umbrella employee gets paid, the additional salary sacrifice will be done from the "bonus" element as this can be reduced for the purposes of tax treatment/efficiency, whereas the minimum wage element can't be.

I hope this answers your question.

I think you are misunderstanding the whole model there? There is no bonus or commission. It's PAYE out of what gross they get from the client. The payslip shows just what a permie one would.

I would have thought bonus/commission/loan payments are in the realms of schemes, not proper PAYE no?

Under the umbrella model, workers are paid their salary in 2 parts; the NMW and the "bonus" or "profit share". It all looks the same on the payslip as a normal PAYE employee, but in the background the calculations have to take into account both of these parts because the minimum that has to be paid in all instances is NMW. The bonus element can vary dependent on pension or business expenses.

Hope this helps.

Kind regards


Zeeshan

[VelcroPower]

I think you are misunderstanding the whole model there? There is no bonus or commission. It's PAYE out of what gross they get from the client. The payslip shows just what a permie one would.

I would have thought bonus/commission/loan payments are in the realms of schemes, not proper PAYE no?

It's been a while since I've seen one, but most umbrella contracts are for NMW to minimise the Umbrella's liability in the event of non payment by the client/agency. On top of that the Umbrella then pays a discretionary amount made up of the remainder of the invoice value after the umbrella costs have been deducted.

i.e. your invoice value for a particular month is is £4,000.

The umbrella deducts Employer NIC, Their Margin, Any allowable expenses, AE employer contributions from their invoice, say £1k. The remaining £3k is the gross pay upon which tax and nics are calculated. That £3k payment is usually NMW+the rest as bonus/commission, which is all subject to PAYE.

In all circumstances I have seen previously the pension amount is deducted from the invoice amount making it an employer contribution rather than as a salary sacrifice. The advantage of that to the umbrella employee are the savings on Employer NIC on top of EE's Nic and Tax.

[VelcroPower]

Hi VelcroPower,

So, when the umbrella employee gets paid, the additional salary sacrifice will be done from the "bonus" element as this can be reduced for the purposes of tax treatment/efficiency, whereas the minimum wage element can't be.

I hope this answers your question.

Thanks - so further question follows - do the employee's get their Employer NIC relief as well on that sacrifice? I know a certain umbrella that used to retain that...