How do umbrella companies work out their after tax figure?

[Pistachio]

Presumably they just take their average "employees" earnings and work out the NI deduction from that?

Could there really be an "industry standard"? I expect it would be better to bludgeon it into people that it is only an indicative figure

[The Force]

I think that some sort of standardised approach would be good. An open acknowledgement that it is an idicative price would seem sensible. Just because I am sad enough to have taken time to work it out, understand it and accept it, doesn't mean that others won't be tempted by one company's advertised price being lower than a competitor, when in actual fact they are the same.

However, I also realise that this is a commercial offer that is being made and understand that Parasol in this example, have tried to make their fee look as attractive as possible. I personally have no real issue unless they were telling outright porkies.

[lurch]

I think there is still a reasonable amount of mileage in the idea that companies calculate things secretly and differently.

This whole net figure thing has always been a bit of a scam. It was initially a way to make much more expensive companies look cheaper against the less expensive companies who were just displaying the gross figure. Now everyone has to do it, and all it does is cloud the issue.

I think it should really just be done away with, as we have already established, the calculation is the same for everyone so the gross is all that counts, all you need to do to have a lower net is some tweaking of your assumptions.

[The Undertaker]

As has been said time and time again every single Umbrella company will offer you exactly the same return assuming you have the same intial invoice value and the same amount fo expenses and they all are using the same tax code.

The ONLY difference will ever be their fee - which is why you may as well take into account their actual fees before and tax - this is what you will see on your paperwork - you will never see your fee after tax relief on any paperwork.

[PhilAtBFCA]

Apologies if this is a little late in the day but there is no doubt that calculations for your net income from either Umbrella or Limited Company should all be standard.

How they are displayed is up to the company doing the calculations, and yes I guess each company will try to make it look good for them.

This link has a spreadsheet and video explanation for Umbrella, Limited Company, PAYE with the agency, Sole Trader and Partnership.

You just need to enter contract rates and expenses.

For each structure there are detailed calculations showing the tax and ni to be paid and your net income.

It may help, if its not too late !

Phil