National Insurance increase starting April 6th 2022

[CatPaw]

Hello everyone,

I need help regarding the NI increase that started applying in April 6th of this year.

I work as a contractor under the PAYE system since March 8th 2022. My recruitment agency, Public Sector Resourcing, uses the services of the umbrella company Giant for payroll management.

They paid me last week (in April) for the first two weeks I worked in March and charged me the uplift in NI that started on April 6th.

Do they have the right to apply the uplift for weeks worked in March when it's stated on Gov.UK that contractors should start paying for that in April (so for weeks worked in April, as I understand it)?

Please let me know what you think.

I called HMRC but the agent I spoke with was completely useless and was unable to tell me if what the umbrella company did was correct or not.

Thanks in advance for your help.

[WTFH]

Hello and welcome.
We had a similar post to this about a week ago, but the person who posted it didn't like the replies.

To summarise them:
When are you due to be paid?

It's not about when the work is done, or when you raise an invoice, but when you are paid.
HMRC will not be able to help you, it will be based on what is in your contract. It's not the agency or payroll that are "applying the uplift", it's the government who are taking more money from individuals, based on PAYE - Pay As You Earn. You earned the money when it was up for payment to you, and that's the point at which tax & NI are deducted.

[eek]

What WTFH says - you are taxed based on the day you are paid which given PSR's 30 day terms means all work done after March 8th would be paid after April 5th and so paid in the 2022/23 tax year against the 2022/23 tax rates.

For reference you don't need to use Giant - from memory PSR allows most FCSA umbrellas to be used - Clarity definitely has contractors working for PSR..

[CatPaw]

Hello and welcome.
We had a similar post to this about a week ago, but the person who posted it didn't like the replies.

To summarise them:
When are you due to be paid?

It's not about when the work is done, or when you raise an invoice, but when you are paid.
HMRC will not be able to help you, it will be based on what is in your contract. It's not the agency or payroll that are "applying the uplift", it's the government who are taking more money from individuals, based on PAYE - Pay As You Earn. You earned the money when it was up for payment to you, and that's the point at which tax & NI are deducted.

Hello,

Thank you so much for your information and guidance!

If my umbrella company is correct in applying the uplift, I don't have any objection. I just wanted to know if that's how the uplift worked, but if it's legit, I don't have an issue with it.

Thanks again for providing clarity on this point. By any chance, would you have a link to the other post made a week ago? Just want to see everyone's perspective on this topic.

Many thanks.

[CatPaw]

What WTFH says - you are taxed based on the day you are paid which given PSR's 30 day terms means all work done after March 8th would be paid after April 5th and so paid in the 2022/23 tax year against the 2022/23 tax rates.

For reference you don't need to use Giant - from memory PSR allows most FCSA umbrellas to be used - Clarity definitely has contractors working for PSR..

Thanks for your reply. I wasn't aware of this, but this information will help me better understand how I'm taxed in the future, so thank you.

It's true that I don't need to have Giant as an umbrella company, but PSR insisted that I uses their services when I had no obligation to do it. I'll know better next time.

Thanks.

[WTFH]

By any chance, would you have a link to the other post made a week ago? Just want to see everyone's perspective on this topic.

Unfortunately no link to the other thread.
The person who asked the question became very upset and put in a GDPR request that we delete all his posts and any that quoted him, so what was an interesting discussion ended up being deleted.

[eek]

Thanks again for providing clarity on this point. By any chance, would you have a link to the other post made a week ago? Just want to see everyone's perspective on this topic.

Many thanks.

The summary is simple - it starts with your question and our answers - tax is based on the day you are due to be paid which for most umbrella workers is the day the agency pays the umbrella (which is why you are getting money on a Monday because PSR pay on a Friday night unlike other Alexander Mann agencies / departments that pay on a Thursday night.

the OP then found a piece of the HMRC tax manual which said something different but couldn't grasp the fact that that part of the manual was for a rather unique set of circumstances (mainly related to equal pay claims that can be backdated up to 15 or so years).

at which point he got upset because the answers he got weren't identical to his hope that the umbrella had done something wrong (note it's rare for umbrella to screw up PAYE tax because HMRC get upset very quickly).

[CatPaw]

Many thanks to both of you!