Salary sacrifice on Umbrella vs PAYE

[ContractorBanking]

How does salary sacrifice work on PAYE rates?

As I understand it, on an Umbrella rate, the Umbrella will first take out Employers NI, Apprenticeship Levy and Umbrella Margin and the remainder is PAYE to the employee.

On PAYE, the agency pays the full PAYE rate directly to the employee. There is no Employers NI, AL or margin taken from the employee PAYE rate.

Question is, what happens if you take pension salary sacrifice on PAYE rate, does the employee benefit from the 'employers NI' that is deemed to have been paid?


thanks

[eek]

How does salary sacrifice work on PAYE rates?

As I understand it, on an Umbrella rate, the Umbrella will first take out Employers NI, Apprenticeship Levy and Umbrella Margin and the remainder is PAYE to the employee.

On PAYE, the agency pays the full PAYE rate directly to the employee. There is no Employers NI, AL or margin taken from the employee PAYE rate.

Question is, what happens if you take pension salary sacrifice on PAYE rate, does the employee benefit from the 'employers NI' that is deemed to have been paid?


thanks

PAYE - the agency is going to be paying 15% employer NI on the money that becomes your gross pay.

Umbrella - the agency pays the full amount (before employer NI and other deductions) to the umbrella. Then depending on the umbrella most allow you (possibly for a small extra fee of £5-10 a week) to put money via salary sacrifice into your pension pot before any tax is deducted.

So it would be

£2500 received
£1000 to pension pot
£25 umbrella fee

£6.45 apprenticeship levy
£179.10 employers Ni

£1290 Gross pay