Payslip - Employers NIC and NI by Employer?

[JPeG]

Hi all. I recently started contracting using an Umbrella company and got my first pay advice last week and, having studied it in some detail, I am happy with everything except that I think I may have paid employers NIC twice. But I am not sure about this as, using some umbrella sites pay calculators, I get the same net take home pay and, one site I went too seemed to use the same calculations as my Umbrella company.

The top section of the pay advice shows the gross amount received from the recruitment agency and deducts the correct amount of Allowable Expenses, Umbrella fee and Employers NIC to give the taxable earnings.

The Employers NIC being worked out correctly as: ((Gross - Expenses - Umbrella fee - £136) * 13.8)/113.8)

The following deductions are then taken from my taxable earnings: Tax, NI contribution and NI by Employer.

My take home pay is then calculated as my taxable earnings less the above deductions plus Allowable Expenses.

Now I may be missing a trick here but the Employers NIC was deducted from my gross to give my taxable earnings so why is it then that the same amount, entitled NI by Employer, is deducted from my taxable pay as well?

The Umbrella company cannot deduct two lots of employers NI contribution and only pay one of them over to HMRC, so what's going on?

I should say here that I have sent an Email to my Umbrella company querying this but won't get an answer until Monday and I thought that if anyone has a sensible answer it may benefit others as well.

[fred857]

You are right, employers (or the umbrella co in your case) should not be deducting employers NI twice. I don't know who your umbrella is (perhaps you could share with us) but I'm experiencing similar fishy goings-on from my umbrella - Parasol (see other recent threads in this forum where the subject is well covered).

I would hazard a guess that the additional 'employer NI' deductions are not labeled as NI on your payslip, but rather 'employment costs' or something similar. This is the crafty game that Parasol are playing.

I would be interested to hear how your umbrella co responds to your question tomorrow. Please let us know.

[stek]

You will pay two lots of NI, Employers and Employees, either clearly shown or hidden in the fees or 'employment costs' charge by the Brolly.

This is the reason why a brolly is financial suicide for me, effectively around 25% NI off the top straight away....

[fred857]

@stek - that's the old brolly vs' ltd debate. The question which JPeG asked is why have two deductions for employers NI been made.

[escapeUK]

Are you sure its actually taken off twice and not just shown twice. I was with Parasol and their payslips were awful, they actually came with a multipage pdf trying to explain them.

Like the other poster said, go Ltd. It will save you thousands.

[fred857]

yep, will save you thousands..fine and dandy..until Hector comes a knocking at the door..

[TheFaQQer]

yep, will save you thousands..fine and dandy..until Hector comes a knocking at the door..

If your contract and working practices are outside IR35, then you'll save thousands.

If your contract and working practices are inside IR35, and HMRC come calling, and you have declared yourself outside IR35, and you have appropriate insurance, then you'll save thousands.

If your contract and working practices are inside IR35, and HMRC come calling, and you have declared yourself outside IR35, and you have taken reasonable steps with regards to checking your IR35 status, and you do not have appropriate insurance, and you have paid into a pension fund correctly, then you'll have to pay something back to HMRC.

If your contract and working practices are inside IR35, and HMRC come calling, and you have declared yourself outside IR35, and you have taken reasonable steps with regards to checking your IR35 status, and you do not have appropriate insurance, and you have not paid into a pension fund correctly, then you'll have to pay the back tax to HMRC.

If you are inside IR35 and run Ltd, then will still be better off than running an umbrella, with reduced risk of someone running off with your money.

[fred857]

agree with your "..running off with your money.." bit!

[stek]

@stek - that's the old brolly vs' ltd debate. The question which JPeG asked is why have two deductions for employers NI been made.

Seems plain to me, OP has deductions for "Employers NIC" - ie ERNI and "NI by Employer" - ie EENI.

[JPeG]

Seems plain to me, OP has deductions for "Employers NIC" - ie ERNI and "NI by Employer" - ie EENI.

It seems that some of you aren't reading too closely what I have said. The pay advice quite clearly shows that Allowed Expenses, Umbrella Fee and Employers NIC are deducted from the gross amount giving the taxable amount, and all figures are correct.

Then, the correct amount of income Tax and NI Contribution (employees NIC) are deducted and this additional NI by Employer is also deducted, which just happens to be exactly the same amount as the Employers NIC deducted from the gross amount.

Now, it seems to me that if anything is listed as NI or NIC then it belongs to HMRC but they surely won't be expecting two lots of Employers NIC. So if the Umbrella company is keeping this money isn't that just a little bit illegal?