Newbie NI question

[joe2014]

Hi all,

Sorry if this has been asnwered I couldn't find exactly the answer - but if I am working under an Umbrella company what kind of NI contributions am I liable to pay, do I need to pay employee and employer contributions

Also with income tax I pay normal PAYE tax right?

Cheers

[mudskipper]

Hi all,

Sorry if this has been asnwered I couldn't find exactly the answer - but if I am working under an Umbrella company what kind of NI contributions am I liable to pay, do I need to pay employee and employer contributions

Also with income tax I pay normal PAYE tax right?

Cheers

Yep

[TykeMerc]

Hi all,

Sorry if this has been asnwered I couldn't find exactly the answer - but if I am working under an Umbrella company what kind of NI contributions am I liable to pay, do I need to pay employee and employer contributions

Also with income tax I pay normal PAYE tax right?

Cheers

It's in General, but I'll give the straight answer.

You will pay Employees NI and Income tax based on your contract income after expenses. These are paid as PAYE.
The expenses will include:-
Any expenses you claim in doing the role
Umbrella company admin charge (you can't expect them to work for free)
The EMPLOYERS NI which the Umbrella has to pay as a cost of employing you and is a percentage of your income.
They may also deduct some for Holiday pay which you can get back later, people with more recent experience of Umbrellas can tell you more about that.

[original PM]

Just also to add that the rate the agency offer you when going Umbrella/Limited should be higher than if you were employed directly by the agency as they should pass you the employers NI contribution that they will be charging the client for.

[joe2014]

Just also to add that the rate the agency offer you when going Umbrella/Limited should be higher than if you were employed directly by the agency as they should pass you the employers NI contribution that they will be charging the client for.

Wait, the rate they offer should be higher than if I was employed directly right? So do you mean by this that part of my hourly rate will be eaten into by employers NI?

What percentage of my hourly rate will I actually take home? Not including any expenses that I could claim as I don't really think I can claim many? Do you know a good online calculator to use?

Also how can different umbrellas offer vastly different fees - some charge £13 and some charge £30?

[joe2014]

Just also to add that the rate the agency offer you when going Umbrella/Limited should be higher than if you were employed directly by the agency as they should pass you the employers NI contribution that they will be charging the client for.

Sorry I read that again I think I know what you mean - you mean that the agency will charge the employer the NI contribution so then I should receive this?

[mudskipper]

Sorry I read that again I think I know what you mean - you mean that the agency will charge the employer the NI contribution so then I should receive this?

No.

If you were employed by the client (as an employee) then the client (employer) would pay the employers NI.

So working via an umbrella, where you are covering the employer NI, you need a higher rate to get the same take home. (+ sick pay, holiday pay, pension etc... which all come from you)

[joe2014]

No.

If you were employed by the client (as an employee) then the client (employer) would pay the employers NI.

So working via an umbrella, where you are covering the employer NI, you need a higher rate to get the same take home. (+ sick pay, holiday pay, pension etc... which all come from you)

Hi,

Thanks I had taken most of those into account apart from employer NI - so my take home pay is looking like it will be about 70% of the hourly rate after I deduct my taxes and Umbrella company margin. The employers NI is a bit of a nasty surprise to me, was aware of everything else.

[TykeMerc]

Hi,

Thanks I had taken most of those into account apart from employer NI - so my take home pay is looking like it will be about 70% of the hourly rate after I deduct my taxes and Umbrella company margin. The employers NI is a bit of a nasty surprise to me, was aware of everything else.

I think the numbers that Umbrellas often claimed were 60-70% of the rate is retained, largely dependent on expenses, to hit 70% retention implies more than minimal reclaimable expenses.

[joe2014]

I think the numbers that Umbrellas often claimed were 60-70% of the rate is retained, largely dependent on expenses, to hit 70% retention implies more than minimal reclaimable expenses.

Hi Tyke,

That's not claiming any expenses, it's more because the rate is pretty low so the income tax paid isn't a huge amount.