SIPP with umbrella

[DolanContractorGroup]

Hi mogga71

Yes, the calculations are correct.


Kind regards

Zeeshan

[lucyclarityumbrella]

Lucy ... do you both roughly agree with these figures?

* Close (assuming 1250L)... breakdown as follows with max pension contributions (£3,596.61 per month):

Contract Rate: £5,000.00 per month

Employers NI: £70.72
Margin: £95.00
Employment Costs: £6.16
Employers Pension: £36.95

Employees NI: £61.50
PAYE: £37.80
Employees Pension: £3,559.66

Net Income: £1,132.20

* If using £40k contributions (£3,333.33 per month) for the pension it is as follows:

Contract Rate: £5,000.00 per month

Employers NI: £102.51
Margin: £95.00
Employment Costs: £7.31
Employers Pension: £48.38

Employees NI: £89.14
PAYE: £83.80
Employees Pension: £3,284.95

Net Income: £1,288.91

[win10]

For the salary sacrifice bit we need to work backwards and first work out the lowest amount the agency must legally pay:

Your salary needs to be at least £8.72 (min wage) * 35 (hours) * 4.33 (weeks per calendar month) or £1321.51 a month before employee taxes

Monthly min pay £1321.51
Income tax        £55.80
Employee NI       £72.30

Net take home    £1193.42

And going the other way to get the employer tax payments

Salary             £1321.51
Employers NI      £83.15
Employment tax    £3.33
Margin                £95.00

Total paid out  £1502.99

amount left     £3497.01 paid into the pension

Why would you put tax and NICs on the minimum wage? If it was the minimum wage per month (not £5000) only can one do SS on it all? So no tax and NICs?
Brolly fee is payable of course.

[eek]

Why would you put tax and NICs on the minimum wage? If it was the minimum wage per month (not £5000) only can one do SS on it all? So no tax and NICs?
Brolly fee is payable of course.

Because the Government determines the point at which NI and tax is paid and that might be lower than the minimum wage - so people always pay some tax.

[lucyclarityumbrella]

Why would you put tax and NICs on the minimum wage?

Because on £8.72 per hour, assuming 37.5 hours a week, the annual taxable salary is just over £17k, so above the £12,500 threshold at which tax kicks in.

[win10]

Because the Government determines the point at which NI and tax is paid and that might be lower than the minimum wage - so people always pay some tax.

Does that mean if you negotiate less hours per week with brolly to the tune of £732/month, you wont pay any NICs and tax?
Arent all brolly contracts in effect zero hour?

But still wouldn't the SS kick in first before tax and NICs?

[lucyclarityumbrella]

Does that mean if you negotiate less hours per week with brolly to the tune of £732/month, you wont pay any NICs and tax?
Arent all brolly contracts in effect zero hour?

But still wouldn't the SS kick in first before tax and NICs?

The brolly will look at the actual hours worked in the calculations, and then refer to the NICs thresholds to see what applies each time payment is made.

[win10]

In simple terms - paying into a pension via salary sacrifice will reduce all tax and NI contributions

I am not saying you are wrong. I just want to understand it. How the above reconcile with the £214 deductions of £5000/m?

[northernladuk]

I am not saying you are wrong. I just want to understand it. How the above reconcile with the £214 deductions of £5000/m?

Yes he is Lucy. He says you dont know your arse from your elbow and he'd like a cup of tea please.

Finish him!!!!

[win10]

Yes he is Lucy. He says you dont know your arse from your elbow and he'd like a cup of tea please.

Finish him!!!!

You trolling and spamming again. Fine.