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View Full Version : Negotiating Rate for joining Umbrella Co: Hr Rate + 12.07% Hol + 12% NI Uplift



RotherValley
22nd March 2011, 20:48
Hello,

(I have searched but couldn't find an answer)

I am about to start a new contracting role and this time want to make sure I am getting what I should, if I choose to switch to an Umbrella Co from PAYE.

My hourly rate through PAYE will be £24 an hour + Holiday on top of that. I work that out as 24 + 12.07% = £26.88p
(I understand the holiday will only be paid on days off but will get to me eventually)

Now if I switch to an Umbrella the agent confirmed that they would cover the National Insurance Uplift on top. Now does that mean I should be expecting to receive £26.88p (rate & Holiday) plus an additional 12% for Employers NI (total £30.10)?

I ask as when the agent gave the figures to his "recommended umbrella company" prior to talking to me they only quoted me a rate of £26.88 per hour?

Which doesn't work out any better if I just stayed on PAYE?

Can someone please confirm I am correct in thinking he has either missed off the holiday or NI Uplift - As I want to go back to the agent to sort this out, and I'd appreciate some assurance that I am in the right and he is trying to himself save some money.

Thanks in Advanced

LisaContractorUmbrella
23rd March 2011, 09:37
Welcome RotherValley

The adjustment to your hourly rate should take into account the uplift required for employer's national insurance which is currently 12.8% but rising to 13.8% in April but it should also take into account the umbrella company's fees. The best idea for you to be able to negotiate is to use an umbrella company's calculator which will give you an indication of your take home pay based on the gross figure that you enter. However, you should be aware that some calculators assume a figure for expenses to which you may or may not be entitled so I would suggest using one that asks for you to enter your expenses separately and then enter a figure of zero which will give you your worst case scenario.

RotherValley
24th March 2011, 16:27
Hi,

Thanks for your answer, are you saying that holiday shouldn't be included?

I've been on the calculator pages I need to confirm the initial rate. I have spoken to my agent and there saying its £26.88.

The way I see though, is if I was PAYE the agent would pay:
Rate + 12.07% (holiday) + They would also pay to government 12% Employers Nat' Ins

However if I go to Umbrella, Agent is saying they pay me:
Rate + 12% Employers National Insurance

So they don't pay me the 12.07% holiday? And I have to cover the employers national insurance?

Thats means the agents actually save money if I go umbrella?

LisaContractorUmbrella
24th March 2011, 16:51
Hi,

Thanks for your answer, are you saying that holiday shouldn't be included?

I've been on the calculator pages I need to confirm the initial rate. I have spoken to my agent and there saying its £26.88.

The way I see though, is if I was PAYE the agent would pay:
Rate + 12.07% (holiday) + They would also pay to government 12% Employers Nat' Ins

However if I go to Umbrella, Agent is saying they pay me:
Rate + 12% Employers National Insurance

So they don't pay me the 12.07% holiday? And I have to cover the employers national insurance?

Thats means the agents actually save money if I go umbrella?

With the figures you have given you would be better off to stay working through straight PAYE as the umbrella company fee hasn't been taken into consideration with that rate either. The only way you would be better off would be if you are going to incur substantial costs, which may be allowable as expenses, whilst you are working on the contract.