NI Employers contributions NI Employers contributions
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  1. #1

    Nervous Newbie


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    Unhappy NI Employers contributions

    Im working under contract for a local authority and using an umbrella company. Ive been there 2 months and have had deduction from my pay for NI employers contribution. Im already in receipt of my state pension so don't understand why the umbrella company are having to pay employers contribution at all, never mind deducting said amount from me.! Im thus paying for a NI contribution which I wont get any benefit from. Ive told the company about my exemption but they have disregarded it. Also HMRC/NI helpline both said neither I or the company should be paying any NI, Please can anyone explain what is right?

  2. #2

    Respect my authoritah!

    NotAllThere's Avatar
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    If you were not a pensioner, the brolly would take your fee, deduct its admin charge, then deduct the employer's NI, then employee's NI and tax and various other things like apprentice levy (but I assume you're not still paying off a student loan ).

    As a pensioner, employee's NI should not be deducted, but employer's will be.
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  3. #3

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    northernladuk's Avatar
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    Have you asked your employer?
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  4. #4

    Fingers like lightning

    midlandlass's Avatar
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    As NotAllThere said, at retirement age you are correct in that no Employee's NI is due, but Employer's NI is due on every employee irrelevant of age, as this is deemed to be paid from the contract rate and not your salary.

    An umbrella company is an employer and, as with any other UK employer, they have a legal obligation to pay employer’s national insurance contributions to HMRC.

    Basically a compliant umbrella company should employ you under an over-arching contract of employment and would then enter into a business to business contract with the recruitment agency or client. They should then raise an invoice for the hours/days that you worked which would be sent to the agency/client with whom they are contracted. Payment would be made to the umbrella company to the value of that invoice and they would then pay the employer’s national insurance contribution from the amount received and they would also retain their margin. The balance is your salary which would be subject to deductions for income tax and employee’s national insurance (although not in your case).

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