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Thread: NI Calcs

  1. #1

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    Am I right in thinking that NI is only calculated per payslip as a M1/W1 deduction unlike income tax which is calculated over the whole tax year?

    If that's correct then I think I would pay less NI in a tax year when working through an Umbrella because there would be no payslips for holiday weeks and the non-holiday weeks would shift more NI into the 2% bracket than would happen over the whole year. According to my own calculations I'm owed £3K income tax at this point in the year but I've underpaid on NI by £1K. Would I have to declare the missing £1K NI as a shortfall in a personal tax return? I realise that's a basic question but I've never done one before.

    I guess the same question could be asked for employer's NI.
    Last edited by mb31; 3rd February 2020 at 22:18.

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    Quote Originally Posted by mb31 View Post
    Am I right in thinking that NI is only calculated per payslip as a M1/W1 deduction unlike income tax which is calculated over the whole tax year?
    Yes. Unless you are a director of your own company, in which case the NICs are aggregated over the tax year.

    Whilst working at A.N. Umbrella company we had someone that held back putting through almost £100k in timesheets (that the agency had paid) over the year and then put them all through in March, saving a load of Employee NIC. We changed the policy on withholding timesheets shortly thereafter..

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    Quote Originally Posted by mb31 View Post
    Am I right in thinking that NI is only calculated per payslip as a M1/W1 deduction unlike income tax which is calculated over the whole tax year?

    If that's correct then I think I would pay less NI in a tax year when working through an Umbrella because there would be no payslips for holiday weeks and the non-holiday weeks would shift more NI into the 2% bracket than would happen over the whole year. According to my own calculations I'm owed £3K income tax at this point in the year but I've underpaid on NI by £1K. Would I have to declare the missing £1K NI as a shortfall in a personal tax return? I realise that's a basic question but I've never done one before.

    I guess the same question could be asked for employer's NI.
    You would need to ask the specific umbrella company how they pay you “holiday pay”
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  5. #5

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    Thanks VP. That makes me wonder if I should hold back timesheets.

    WTFH I've already asked that question and holiday pay is advanced. I would have to take holidays in week blocks though to reduce my NI bill. I worked out I can save myself about £500 on employee NI if I take 5 weeks as whole weeks with the other week potentially split into bank holidays.

  6. #6

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    Quote Originally Posted by mb31 View Post
    Thanks VP. That makes me wonder if I should hold back timesheets.

    WTFH I've already asked that question and holiday pay is advanced. I would have to take holidays in week blocks though to reduce my NI bill. I worked out I can save myself about £500 on employee NI if I take 5 weeks as whole weeks with the other week potentially split into bank holidays.
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    Quote Originally Posted by GhostofTarbera View Post
    They let you on site ?

    Sue the basturds for discrimination against (insert your made up stuff)

    Nice one


    Sent from my iPhone using Contractor UK Forum
    Thanks Ghost, if it were possible to submit a years worth of timesheets in one payslip then that would bridge the gap between Umbrella take home and ltd by nearly 10%. I've just got to sell the idea to the client and my wife.

    As it happens, Danbro did suggest that I hold back on submitting timesheets if I don't like paying their weekly rate. I complained because they've made no reasonable adjustments. Apparently they can't pay for my fuel on disability grounds unless I have a Danbro company car. I told them I'd be willing to pay the BIK tax on that car but then they've started ignoring my emails.

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