Hello all
I have recently taken on my first contractor role after being permanent for several years.
I opted to go down the umbrella route and after speaking to 3 or 4 companies, I decided to go with Parasol (yup, I've since found all the horror stories!).
I had used several "take home pay" calculators and done the sums myself to get a good idea of what my take home pay would be. I even got a couple of breakdowns from Parasol and Contractor Umbrella specific to my circumstances, and they both came back with similar amounts which was reassuring.
Here's what Parasol's tailored calculation said I could expect on a weekly basis (I'll getting paid monthly):
Income: £375 daily rate x 5 days = £1875
Expenses: £0
Employers NI: £207.55 ('Employment Costs')
Employees NI: £96.98
Employee Tax: £461.44
Umbrella Margin: £27.50
Total Net Income: £1081.53 (around 58% take home pay)
Contractor Umbrella's calculator came back with a net income of £1056, so fairly similar.
I began this contract on 12th November and therefore was expecting to be paid roughly 3x the amount above (£3244.59) approx as I have worked only 3 weeks of November in this contract. For the first week of November I was still in my previous permanent job and received my last wages for that job in mid October (they had paid me extra to cover the days I worked in November).
Now, I have recently received my first Payslip from Parasol for work completed in November:
Income: £5625 daily rate x 15 days = £5625
Expenses: £150
Employers NI: £569.52 ('Employment Costs')
Employees NI: £372.94
Employee Tax: £249.64
Umbrella Margin: £119.50
Total Net Income: £4278.40 (approx 76% take home pay)
My take home pay was much more than I expected. Obviously the thing that took me by surprise was the Employee Tax.
I rang Parasol to confirm this. Even taking into account the £150 expenses which were not in the original estimate, they agreed it seems a very low amount of PAYE tax.
I had been permanently employed by another company before this, where I was in receipt of taxable benefits which no longer apply and the tax office changed my tax code from 683L to 740L when I started contracting to take this into consideration.
Parasol said all the tax figures etc are calculated by their computer systems and "are correct." The guy I spoke to suggested that my tax payments would even out over the year(?).
The other thing I noticed was that the Employee NI figure was greater than I expected.
The weekly esitmate I had been given was £96.98 per week. I worked only 3 weeks in November yet the Employees NI I paid was £372.94.
Can anyone help me to understand why the PAYE tax was so low and why the Employee's NI figure was greater than 3 times the estimate?
I have recently taken on my first contractor role after being permanent for several years.
I opted to go down the umbrella route and after speaking to 3 or 4 companies, I decided to go with Parasol (yup, I've since found all the horror stories!).
I had used several "take home pay" calculators and done the sums myself to get a good idea of what my take home pay would be. I even got a couple of breakdowns from Parasol and Contractor Umbrella specific to my circumstances, and they both came back with similar amounts which was reassuring.
Here's what Parasol's tailored calculation said I could expect on a weekly basis (I'll getting paid monthly):
Income: £375 daily rate x 5 days = £1875
Expenses: £0
Employers NI: £207.55 ('Employment Costs')
Employees NI: £96.98
Employee Tax: £461.44
Umbrella Margin: £27.50
Total Net Income: £1081.53 (around 58% take home pay)
Contractor Umbrella's calculator came back with a net income of £1056, so fairly similar.
I began this contract on 12th November and therefore was expecting to be paid roughly 3x the amount above (£3244.59) approx as I have worked only 3 weeks of November in this contract. For the first week of November I was still in my previous permanent job and received my last wages for that job in mid October (they had paid me extra to cover the days I worked in November).
Now, I have recently received my first Payslip from Parasol for work completed in November:
Income: £5625 daily rate x 15 days = £5625
Expenses: £150
Employers NI: £569.52 ('Employment Costs')
Employees NI: £372.94
Employee Tax: £249.64
Umbrella Margin: £119.50
Total Net Income: £4278.40 (approx 76% take home pay)
My take home pay was much more than I expected. Obviously the thing that took me by surprise was the Employee Tax.
I rang Parasol to confirm this. Even taking into account the £150 expenses which were not in the original estimate, they agreed it seems a very low amount of PAYE tax.
I had been permanently employed by another company before this, where I was in receipt of taxable benefits which no longer apply and the tax office changed my tax code from 683L to 740L when I started contracting to take this into consideration.
Parasol said all the tax figures etc are calculated by their computer systems and "are correct." The guy I spoke to suggested that my tax payments would even out over the year(?).
The other thing I noticed was that the Employee NI figure was greater than I expected.
The weekly esitmate I had been given was £96.98 per week. I worked only 3 weeks in November yet the Employees NI I paid was £372.94.
Can anyone help me to understand why the PAYE tax was so low and why the Employee's NI figure was greater than 3 times the estimate?
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