I am currently working as a contractor (first assignment so be gentle with my ignorance!) and I'm pretty sure that I am being underpaid. When I signed up with the umbrealla company I was promised an estimated (oxymoron there...) 79% or my gross pay. I am on an hourly rate of £13.33/hour and worked 39.75 hours last week (bare with me through this example please). This works out at £529.87 gross pay. So if I were to get the alleged 79% of this it would be £418.60.
My payslip has come through at £365.94 which is 69% or my gross and most other weeks it is closer to 66%.
For about 2 months my umbrella company have been telling me that this difference is due to the fact that I am on an emergency tax code (603L Week 1). This is true as my previous employer took about 8 weeks to send my P45 through. I have finally got this through to my umbrella company and they have no informed me that my emergency tax code is correct and that I will be taxed on a week by week basis. I don't really understand this but it is fine as I do not believe the issue comes from over paying in my income tax.
I got back to them and asked them for a breakdown of how my pay was calculated and they got back to me with this:
Please see the deductions from your pay as follows;
Invoice amount £529.87
-£40.57 Employers NI (12.8%)
-£27.50 PPA Cost (weekly service fee)
-£39.86 Business Expenses
You are then taxed & NI’d on the remaining £421.94
Amount £421.94
-£34.86 Employees NI (11%)
-£61.00 PAYE (tax @ 20% after £116.06 free pay allowance applied)
+£39.86 Business Expenses
= £365.94 Total payable.
For a start these number simply do not add up. The Employers NI should be 12.8% of my income. This is £64.30 not £40.57. Same again with the Employees NI.
Most distressing to me is the fact that I am paying both Employees and Employers NI. Is this just to do with the way that umbrella companies set you up as "a director of your own company"?
Normally I would put this down as just one of those things that hasn't worked out as well as I'd hoped but I have a colleague who is with the same umbrella company who is earning £3.33 less per hour (about £130/week) than me but is getting paid pretty much the same weekly NET amount.
Any advice that anyone can give me will be much appreciated.
My payslip has come through at £365.94 which is 69% or my gross and most other weeks it is closer to 66%.
For about 2 months my umbrella company have been telling me that this difference is due to the fact that I am on an emergency tax code (603L Week 1). This is true as my previous employer took about 8 weeks to send my P45 through. I have finally got this through to my umbrella company and they have no informed me that my emergency tax code is correct and that I will be taxed on a week by week basis. I don't really understand this but it is fine as I do not believe the issue comes from over paying in my income tax.
I got back to them and asked them for a breakdown of how my pay was calculated and they got back to me with this:
Please see the deductions from your pay as follows;
Invoice amount £529.87
-£40.57 Employers NI (12.8%)
-£27.50 PPA Cost (weekly service fee)
-£39.86 Business Expenses
You are then taxed & NI’d on the remaining £421.94
Amount £421.94
-£34.86 Employees NI (11%)
-£61.00 PAYE (tax @ 20% after £116.06 free pay allowance applied)
+£39.86 Business Expenses
= £365.94 Total payable.
For a start these number simply do not add up. The Employers NI should be 12.8% of my income. This is £64.30 not £40.57. Same again with the Employees NI.
Most distressing to me is the fact that I am paying both Employees and Employers NI. Is this just to do with the way that umbrella companies set you up as "a director of your own company"?
Normally I would put this down as just one of those things that hasn't worked out as well as I'd hoped but I have a colleague who is with the same umbrella company who is earning £3.33 less per hour (about £130/week) than me but is getting paid pretty much the same weekly NET amount.
Any advice that anyone can give me will be much appreciated.
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