umbrella take-home pay: why are NI/tax calc(deductions) so diverse ?

[kumarz]

hi all,
I'm another one of these Ltd co. contractors being forced to go brolly by end of tax year.
Been trawling forums on the interwebs but haven't found anything which explicity states why (pls point me at one if you can ?) the deductions (NI and tax) are so markedly different based on the same daily rate ?
As expected I am seeing different quotes from each offering, but when I go into the details, sometimes the deductions are different enough to overshadow the diff in margin (umbrella fee) plus apprenticeship levy.
Does anyone have a quick explain on how, using the same tax code and the same basic pay, these guys are arriving at different figures for NI(employer+employee) and Tax(income+employer)?
Are they assuming a different tax bracket even though this should be easy to infer based on the basic pay(?).

edit: will post about the para above on here to ask specific questions, sorry! >> https://www.contractoruk.com/forums/...ey-differ.html
Still curious about the below bit about why PAYE take home pay is lower than brolly though:

Also noticed that even though I am assuming zero expenses and benefits, the agency PAYE take-home pay calcs are actually lower than that off umbrella(a few quid only a week but still), surely the umbrella margin/fee which the agency doesn't charge if I go direct should make it a more expensive option? What am I missing here please?
Quite surprised by this and the agency admitted to me that this is ironic: but seeing this across the board but not much direct mention of this online: perhaps someone could explain or point me at someplace where it has already been discussed ?

[ladymuck]

They shouldn't be different. It's a warning flag if you're getting different calculations.

Get a proper illustration from the umbrellas you are thinking of working with as there's lots of assumptions about expenses and pensions that they may be making. Bear in mind you won't get the 5% expenses allowance on an inside IR35 gig.

Clarity will definitely give you a proper illustration. The tool on their website gives quite a detailed breakdown too.

[Juninho1976]

it looks like I missed this thread before i posted on this tpic- but I am seeing similar small discrepancies between different umbrellas

both recommended on here - and both seem legit and breakdowns are a little out for NI (£2 a week) but final take home is out by about £70 a week...


in one I think they have allowed for £25 expenses but ironically the higher take home does not include this and also ironically the higher take home has a slightly higher fee

I should surmise
Umbrella 1: fees = £14, allowable expenses = £25, employers NI = x, take home = y
Umbrella 2: fees = £23, allowable expenses = £0, NI = x+£2, take home = y+£70

So higher fees, marginally higher NI cost yet a higher take home, both weekly, both 0 pension and both rolled up holidays!


Maybe insignificant but for me the extra £70 is worth it but i don't like discrepancies like this...

EDIT: Looking at the breakdown it looks like Umbrella 2 has calculated the employers NI identically but the PAYE is £100/week less than Umbrella 1... its a different gross (because of the fees and expenses) but shouldn't be out by £100 ?

Why would that be?

[ladymuck]

it looks like I missed this thread before i posted on this tpic- but I am seeing similar small discrepancies between different umbrellas

both recommended on here - and both seem legit and breakdowns are a little out for NI (£2 a week) but final take home is out by about £70 a week...


in one I think they have allowed for £25 expenses but ironically the higher take home does not include this and also ironically the higher take home has a slightly higher fee

I should surmise
Umbrella 1: fees = £14, allowable expenses = £25, employers NI = x, take home = y
Umbrella 2: fees = £23, allowable expenses = £0, NI = x+£2, take home = y+£70

So higher fees, marginally higher NI cost yet a higher take home, both weekly, both 0 pension and both rolled up holidays!


Maybe insignificant but for me the extra £70 is worth it but i don't like discrepancies like this...

EDIT: Looking at the breakdown it looks like Umbrella 2 has calculated the employers NI identically but the PAYE is £100/week less than Umbrella 1... its a different gross (because of the fees and expenses) but shouldn't be out by £100 ?

Why would that be?

Might be an assumption in the tax code. One may have used 1250L (I think that's this year's iirc) and another may have used emergency tax rate.

The only way you can sure is to call them up and ask for a personalised illustration

[Juninho1976]

Ah thanks very much but i would have thought emergency tax would have been even higher but that's the most plausible! I did get a 'personalised illustration ' from both but they both look like stock (and off the back of a 3 minute phone call - et voila the email is in my inbox... !) they don't break down WHY the PAYE is slightly different!

The only other difference is umbrella 2 asked me how many hours I would work in a week... but the 'gross' weekly income is identical.

I punched in the numbers in clarity's calculator (I do not think they are on the list but ill double check) - and it was almost identical to umbrella 2 (only difference was marginal fees) ... so comfortable with umbrella 2 ...


thanks for the help!

[lucyclarityumbrella]

hi all,
I'm another one of these Ltd co. contractors being forced to go brolly by end of tax year.
Been trawling forums on the interwebs but haven't found anything which explicity states why (pls point me at one if you can ?) the deductions (NI and tax) are so markedly different based on the same daily rate ?

Probably down to a couple of things...
1. the days worked - we always quote on a 20 day month unless otherwise asked - however I know others that work on more days which will increase the gross figure in the first place
2. Some still assume expenses - in light of IR35, likelihood of being able to claim these is slim!
3. Holiday - accrual or rolled up?
4. Should all be on 1250L W1/M1 unless otherwise requested
5. Pensions AE inclusion - most won't unless requested
6. Levy - again dependent on the brolly - we quote to give a like for like but do not yet fall into the category to have to make this deduction from the gross contract rate.

HTHs

[Juninho1976]

Ah the plot thickens now...

I worked our gross numbers from both umbrella 1 and 2 (ie minus NI , levy and their margin) and plugged these into The Salary Calculator - Take-Home tax calculator

And salary call reconciles with the PAYE numbers for umbrella 1 but is out ( by just under 100) for umbrella 2 ...

I think umbrella 2 illustration is a bit out...

I was going to go for that as it was around 70 more take home than umbrella 1 with marginally higher fees but I suspect it’s wrong? But how can they get it wrong? Also umbrella 2 matched exactly with my cross check on the clarity calculator.

It’s not tax code now making the diff...