Why am I paying EMPLOYERS NI?

Linton · 12-08-2009, 12:13 PM

I was told to get an umbrella company by my agency, I did that, so far so good.

I got my first pay through yesterday and I noticed they were deducting EMPLOYERS national insurance as well as employees.

I called them and they said that through an umbrella company I need to pay employers NI. Now, correct me if I'm wrong, but when I got the sales talk I was told I was an employee.

So why do I have to pay THEIR contributions? Are they conning me?

They can't give me a decent answer. What's the deal? This is a fair chunk of my take home!

Malvolio · 12-08-2009, 12:23 PM

Who else is going to pay it?

You might find this post of interest...

monstro · 12-08-2009, 12:46 PM

question Linton, did you bother to look at any of the literature that was sent to you, request a quote by email etc?

Paying Employers NI is part of the deal of going through a brolly. As we are just payroll vehicles, paying this would send us out of business pretty sharpish.

However... your rate should include an uplift from your agency and your agency should have explained this to you before. I say should as in some cases they don't, and your brolly should have mentioned this upfront as well. So bad on both of them as well.

But with the uplift and if you've got reasonable levels of expenses, you should actually come out better even with this extra tax burden.

Malvolio · 12-08-2009, 01:50 PM

and if you've got reasonable levels of expenses

AAaarrggghhh!!!

You really need to read the news...

monstro · 12-08-2009, 01:53 PM

If you have legitimate, receipted expenses then I don't know why that merits that comment.

curleyted · 12-08-2009, 01:57 PM

Quote:

Originally Posted by Linton

I was told to get an umbrella company by my agency, I did that, so far so good.

I got my first pay through yesterday and I noticed they were deducting EMPLOYERS national insurance as well as employees.

I called them and they said that through an umbrella company I need to pay employers NI. Now, correct me if I'm wrong, but when I got the sales talk I was told I was an employee.

So why do I have to pay THEIR contributions? Are they conning me?

They can't give me a decent answer. What's the deal? This is a fair chunk of my take home!

Linton,

Whilst Malvolio and monstro bicker, you might want to take a look at this calculator:

Agency Salary Uplift – freelancesupermarket.com – showcasing freelance services

If the agency quoted you a PAYE rate and what is sometimes known as a limited company rate (the rate you get for working through your umbrella) this will let you know whether the extra money covers your NI.

Monstro touched on the fact that the money has to come from somewhere, and your rate includes the employers NI savings that the agency is making by not paying you from their company (because if they did, THEY would be paying it).

Put the figures in there and check they add up. If not let us know for some more advice.

Beefy198 · 12-08-2009, 02:15 PM

The alternative is for umbrella companies to advertise their fees including national insurance.

Problem is, the one umbrella company that did that wouldn't get much business.

They definitely should have made this situation clear to you during the initial call. It's only fair.

Malvolio · 12-08-2009, 02:23 PM

Quote:

Originally Posted by curleyted

Linton,

Whilst Malvolio and monstro bicker,

I'm not bickering. Advertising umbrella services on the basis of claimable expenses is just plain wrong and sets an unreasonable expectation in the minds of comparatively inexperienced people. HMRC are increasingly coming to the same view.

If you can't sell your services on the basis of quality and cost-effectiveness, you're probably doing something wrong.

And BTW, if the agency is paying the ERNIC uplift, it still comes out of your gross, they merely adjust their margin to cover it.

curleyted · 12-08-2009, 04:14 PM

You were having your own discussion with monstro, I just wanted the original poster to know where he could find help. Hence why I said bickering

Malvolio · 12-08-2009, 04:50 PM

Quote:

Originally Posted by curleyted

You were having your own discussion with monstro, I just wanted the original poster to know where he could find help. Hence why I said bickering

Yes, understand that and totally agreee with you doing so. What I don't want to see is yet another umbrella company confusing expenses with taxable income. The OP is probably not best placed to judge that little detail, after all.