How do umbrellas calculate employers NI? How do umbrellas calculate employers NI?
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  1. #1

    Nervous Newbie


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    Default How do umbrellas calculate employers NI?

    I'm looking at signing up to umbrella company as my roll will now be inside IR35. I've been calculating the figures manually and comparing them against the umbrella companies figures and can't for the life of me understand how they get to their employer NI figures. I was wondering if anyone could explain or are these figures just flat out wrong and the actual cost of employer NI would be higher

    As a example on giants site.
    giant umbrella | giant contractor
    On 3500 a week employers NI and apprenticeship levy of is shown as 413
    Doing the calculation myself so taking the week amount minus the threshold
    (3500 - 166) / 100 * 13.8 = 460
    There's a 47 pound difference and that's not even include the apprenticeship levy? It's very confusing.

  2. #2

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    Maybe the calculation is a bit more complex

  3. #3

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    I didn't think Employers' NICs had a threshold, only Employees and was a flat 13.8% of gross.

    ICBW...
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  4. #4

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    Maybe they've deducted something else first before deducting NI so the base on which the calculation is made is lower?

    The £166 deduction is correct.

    I wonder if they took off the 12-something percent for holiday pay first?

  5. #5

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    Quote Originally Posted by scottwio View Post
    I'm looking at signing up to umbrella company as my roll will now be inside IR35. I've been calculating the figures manally and comparing them against the umbrella companies figures and can't for the life of me understand how they get to their employer NI figures. I was wondering if anyone could explain or are these figures just flat out wrong and the actual cost of emloyer NI would be higher

    As a example on gaints site.
    giant umbrella | giant contractor
    On 3500 a week employers NI and apprenticeship levy of is shown as 413
    Doing the calcualtion myself so taking the week amount minus the threshold
    (3500 - 166) / 100 * 13.8 = 460
    There's a 47 pound difference and that's not even include the apprenticeship levy? It's very confusing.
    At the end of the day only the fee of the umbrella will be the difference - no umbrella can change what tax you pay


    Sent from my iPhone using Contractor UK Forum

  6. #6

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    Quote Originally Posted by GhostofTarbera View Post
    At the end of the day only the fee of the umbrella will be the difference - no umbrella can change what tax you pay


    Sent from my iPhone using Contractor UK Forum
    You say that but Clarity quote £399 for employers NI so I'm now just as stumped as the OP

  7. #7

    Fingers like lightning


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    Quote Originally Posted by scottwio View Post
    On 3500 a week employers NI and apprenticeship levy of is shown as 413
    Doing the calculation myself so taking the week amount minus the threshold
    (3500 - 166) / 100 * 13.8 = 460
    There's a 47 pound difference and that's not even include the apprenticeship levy? It's very confusing.
    OK let's explain - a simple 13.8% cannot calculate the ERs NI!
    Lets put this into normal working practice... An employer calculates the ERs NI at 13.8% of the taxable salary, yet for a contractor, we do not know the taxable salary, we only know the gross contract rate. So in simple terms there is payroll magic that happens with a reverse calculation to work out the taxable salary to calculate the 13.8% from that
    It's not quite as standard as normal payroll is all I have to say.

  8. #8

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    Quote Originally Posted by malvolio View Post
    I didn't think Employers' NICs had a threshold, only Employees and was a flat 13.8% of gross.
    Afraid not the Ers NI still looks at the secondary threshold before it is calculated.

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