My first payslip with IR35 and I don't get it! My first payslip with IR35 and I don't get it! - Page 2
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  1. #11

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    Quote Originally Posted by petafin View Post
    Hi,

    I used to be a LTD contractor and just moved to IR35. I got my first payslip but I don't understand it. Can someone explains to me those numbers?

    The weekly pay is £3825 based on a 5-day week at £765.

    The total paid by the client to the umbrella company is £3825.

    Then the umbrella company takes £18 off per week as margin.

    But then they say Employer NIC is £437.55 and apprentiship levy is £16.70.
    There is also employer pension contribution for £13.08.

    And so I am left with a gross pay of: £3339.

    Now when I ask the umbrella company how they arrive to that £3339 they tell me they just removed all the figures above from the £3825. But then when I asked them how they calculated employer NIC and the apprenticeship levy, they say they applied the percentages (13.8% for NIC and 0.5% for the apprenticeship levy) on the £3339 .... It doesn't make sense to me that they calculate NIC and levy based on a number that they say they generated using those 2 figures... Which ones come first, it cannot be both.

    Anyone understands those numbers??

    Thanks.
    Jerome
    Remember to get umbrella to update your tax code - otherwise nasty shock in a few months


    Sent from my iPhone using Contractor UK Forum

  2. #12

    Fingers like lightning


    Join Date
    Feb 2013
    Location
    Ipswich, Suffolk
    Posts
    830

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    Quote Originally Posted by petafin View Post
    Hi,

    I used to be a LTD contractor and just moved to IR35. I got my first payslip but I don't understand it. Can someone explains to me those numbers?

    The weekly pay is £3825 based on a 5-day week at £765.

    The total paid by the client to the umbrella company is £3825.

    Then the umbrella company takes £18 off per week as margin.

    But then they say Employer NIC is £437.55 and apprentiship levy is £16.70.
    There is also employer pension contribution for £13.08.

    And so I am left with a gross pay of: £3339.

    Now when I ask the umbrella company how they arrive to that £3339 they tell me they just removed all the figures above from the £3825. But then when I asked them how they calculated employer NIC and the apprenticeship levy, they say they applied the percentages (13.8% for NIC and 0.5% for the apprenticeship levy) on the £3339 .... It doesn't make sense to me that they calculate NIC and levy based on a number that they say they generated using those 2 figures... Which ones come first, it cannot be both.
    Hi Jerome

    OK take your invoice value as £3,825 deduct £437.55 (Ers NI) and £16.70 (AL) and margin £18, less pension £13.01, leaving a taxable salary of £3,339.74. For the Ers, it is 13.8% of that but the threshold for NI has to be taken into account before that is calculated, so it is not a simple 13.8% of the taxable salary.

    And yes it is a reverse calculation that we run to be able to calculate the taxable salary in order to calculate the Employers NI and levy - call it umbrella magic

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