Parasol - Employment Costs - extra charges??

[gitanak]

When you work with an umbrella company, you are their employee which means that your earnings are subject to PAYE - Income Tax and Employee's National Insurance. As they are your employer they are legally obliged to pay Employer's National Insurance which will be deducted from the contract value, along with the umbrella company margin, before your salary is calculated. The other thread that you started states that you previously had your own Ltd Co - the tax and NI position working with an umbrella company is pretty much the same as if you were working through your own Ltd inside IR35.

Many thanks for your answers. Im enquiring about the EMPLOYMENT COST. I was charged NI, Income tax and Parasol Margin, which is correct, plus EMPLOYMENT COST(which Parasol Claim is for NI)? Why am i paying twice for NI? Parasol says that Employment cost is always charged if you work through umbrella company, which is not correct as im not charged this fee when i was working for another agency.

[stek]

Many thanks for your answers. Im enquiring about the EMPLOYMENT COST. I was charged NI, Income tax and Parasol Margin, which is correct, plus EMPLOYMENT COST(which Parasol Claim is for NI)? Why am i paying twice for NI? Parasol says that Employment cost is always charged if you work through umbrella company, which is not correct as im not charged this fee when i was working for another agency.

It's quite simple, the employment cost is the Employers NI cost which the Brolly recover from the daily rate. You have to pay Employers and Employees NI from the daily rate, that's normal.

[TheFaQQer]

Many thanks for your answers. Im enquiring about the EMPLOYMENT COST. I was charged NI, Income tax and Parasol Margin, which is correct, plus EMPLOYMENT COST(which Parasol Claim is for NI)? Why am i paying twice for NI? Parasol says that Employment cost is always charged if you work through umbrella company, which is not correct as im not charged this fee when i was working for another agency.

Someone has to pay employers NI. In the case of an umbrella company, this is deducted from your invoice value and you pay it; in the case a a limited company, you normally don't have a salary that high, but if you do then your employer pays it.

If you were working via an agency, then they would have paid the employers NI - the fact that they did it from their margin rather than your rate implies that they were making shed loads from you to be able to afford it in the first place.

[TykeMerc]

Many thanks for your answers. Im enquiring about the EMPLOYMENT COST. I was charged NI, Income tax and Parasol Margin, which is correct, plus EMPLOYMENT COST(which Parasol Claim is for NI)? Why am i paying twice for NI? Parasol says that Employment cost is always charged if you work through umbrella company, which is not correct as im not charged this fee when i was working for another agency.

National Insurance has 2 components:-

Employees NI which you're used to seeing on payslips

Employers NI which unless you're working via an Umbrella you don't see (it's hidden, but paid), but is paid by your employer. Your employer funds that by the money they make from you being an employee.

Because you're using an Umbrella company and they EMPLOY you they are REQUIRED to pay Employers NI, that has to be funded from somewhere, that somewhere is the contract rate that the client or agent is paying you.

ANY Umbrella you worked this contract through would HAVE to pay the Employers NI and they take the money to pay that from the rate, they do tell you about it on their payment advice, will discuss it if asked and don't make a secret of the fact.

You really need to read what people have said on this thread (and many others on CUK) mid 60% retention via Umbrella is fairly average.

[SueEllen]

National Insurance has 2 components:-

Employees NI which you're used to seeing on payslips

Employers NI which unless you're working via an Umbrella you don't see (it's hidden, but paid), but is paid by your employer. Your employer funds that by the money they make from you being an employee.

When an employer quotes a salary they have already taken off the cost of the employers NI they would be paying to employ you.

[gitanak]

Ok, many thanks for all replies. Now it makes sense. Its actually very sad and ridiculously disappointing, how much is being deducted from poor people salary!

[LisaContractorUmbrella]

Ok, many thanks for all replies. Now it makes sense. Its actually very sad and ridiculously disappointing, how much is being deducted from poor people salary!

How have you been receiving payment up until now??

[88zero]

A shame they don't tell you about this hidden cost when you ask for an estimate on your net pay

Their solution is to claim more in expenses to offset against the national insurance.

I shall be going back to Giant after this whoa re much more straight forward and have no hidden costs.

[Andy Hallett]

A shame they don't tell you about this hidden cost when you ask for an estimate on your net pay

Their solution is to claim more in expenses to offset against the national insurance.

I shall be going back to Giant after this whoa re much more straight forward and have no hidden costs.

I'd be amazed if any legit brolly was able to offer you a better return. Both Parasol and Giant fit that category.

[LisaContractorUmbrella]

A shame they don't tell you about this hidden cost when you ask for an estimate on your net pay

Their solution is to claim more in expenses to offset against the national insurance.

I shall be going back to Giant after this whoa re much more straight forward and have no hidden costs.

When you say 'they', who are you referring to?? If it's an umbrella company they should certainly not be suggesting or orchestrating the claiming of extra 'expenses' if the costs haven't been incurred. ANY umbrella company that you contact should give you the same take home pay provided that you give them the same information each time on your rate and expenses incurred; the only difference should be any variance in their margin. Unfortunately some umbrella companies try to make their take home figure look better by including expenses in the calculation which have not been incurred - this may entice you through the door but you will definitely be in for disappointment when you open your first pay slip!

If there's one thing that an umbrella company should not be using as a marketing tool, it's the offer to 'increase' or 'maximise' your take home pay - if they're operating compliantly they can't it's as simple as that.