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  • FIRST POST
    • randomfandom
    • By randomfandom 8th Mar 17, 9:59 PM
    • 33Posts
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    randomfandom
    Overpaying National Insurance....?
    • #1
    • 8th Mar 17, 9:59 PM
    Overpaying National Insurance....? 8th Mar 17 at 9:59 PM
    Hi,

    I'm working through an agency, but being paid through an umbrella company. I started my position last autumn and thought that as the financial year was coming to an end I would check my national insurance contributions.

    To date, I've paid £799 but when I've checked on online calculators they all estimated that it should only have paid around £480 on my income of just over £12k.

    I know that with an umbrella you pay both employer's and employee's tax and NI, but I assumed that the employee contributions would be the same as if you were paid PAYE.

    Is there something I'm missing about being paid by an umbrella company which means they can deduct more NI than if I was PAYE, or has there been some sort of error where more NI has been taken than I was liable to pay?
Page 1
    • chrisbur
    • By chrisbur 8th Mar 17, 11:35 PM
    • 2,794 Posts
    • 1,511 Thanks
    chrisbur
    • #2
    • 8th Mar 17, 11:35 PM
    • #2
    • 8th Mar 17, 11:35 PM
    Hi,

    I'm working through an agency, but being paid through an umbrella company. I started my position last autumn and thought that as the financial year was coming to an end I would check my national insurance contributions.

    To date, I've paid £799 but when I've checked on online calculators they all estimated that it should only have paid around £480 on my income of just over £12k.

    I know that with an umbrella you pay both employer's and employee's tax and NI, but I assumed that the employee contributions would be the same as if you were paid PAYE.

    Is there something I'm missing about being paid by an umbrella company which means they can deduct more NI than if I was PAYE, or has there been some sort of error where more NI has been taken than I was liable to pay?
    Originally posted by randomfandom
    I assume that you have put into the calculator your total earnings to get this NI figure. This will give you the expected NI for someone who has earned this amount for the whole year getting roughly equal payments every pay interval ( ie every month or week they are paid). You get an allowance each pay interval on which no NI is paid and as you started part way through the year you have not received the full year's allowances that the calculator would assume.
    To check the figures you need to put in each payday's earnings separately.
    • randomfandom
    • By randomfandom 9th Mar 17, 12:10 AM
    • 33 Posts
    • 25 Thanks
    randomfandom
    • #3
    • 9th Mar 17, 12:10 AM
    • #3
    • 9th Mar 17, 12:10 AM
    Yes, I used the figure of my total earnings.

    But shouldn't it balance out so that by the end of the financial year you've paid the correct equivalent amount, in the way that it does with tax?
    • Torry Quine
    • By Torry Quine 9th Mar 17, 12:12 AM
    • 16,995 Posts
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    Torry Quine
    • #4
    • 9th Mar 17, 12:12 AM
    • #4
    • 9th Mar 17, 12:12 AM
    Yes, I used the figure of my total earnings.

    But shouldn't it balance out so that by the end of the financial year you've paid the correct equivalent amount, in the way that it does with tax?
    Originally posted by randomfandom
    No it doesn't work that way. Each pay period, eg weekly, monthly is looked at seperately for NI, not cumulatve.
    Life is like riding a bicycle, to keep your balance you must keep moving . Albert Einstein.

    I can bear pain myself, he said softly, but I couldna bear yours. That would take more strength than I have -
    Diana Gabaldon, Outlander
    • agrinnall
    • By agrinnall 9th Mar 17, 8:34 AM
    • 18,544 Posts
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    agrinnall
    • #5
    • 9th Mar 17, 8:34 AM
    • #5
    • 9th Mar 17, 8:34 AM
    If you tell us how much your gross pay is each week or month then we can tell you how much employees NI you should have paid. But the chances are that it is already correct and that you've just misunderstood how it works.
    • randomfandom
    • By randomfandom 9th Mar 17, 9:48 PM
    • 33 Posts
    • 25 Thanks
    randomfandom
    • #6
    • 9th Mar 17, 9:48 PM
    • #6
    • 9th Mar 17, 9:48 PM
    If you tell us how much your gross pay is each week or month then we can tell you how much employees NI you should have paid. But the chances are that it is already correct and that you've just misunderstood how it works.
    Originally posted by agrinnall
    My gross is £496 per week.
    • chrisbur
    • By chrisbur 10th Mar 17, 9:03 AM
    • 2,794 Posts
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    chrisbur
    • #7
    • 10th Mar 17, 9:03 AM
    • #7
    • 10th Mar 17, 9:03 AM
    My gross is £496 per week.
    Originally posted by randomfandom
    Employee's NI 40.92
    Employer's NI 46.92
    Figures from listentotaxman so may vary by a few pence.
    How does this compare to what you have paid?
    • randomfandom
    • By randomfandom 12th Mar 17, 9:02 AM
    • 33 Posts
    • 25 Thanks
    randomfandom
    • #8
    • 12th Mar 17, 9:02 AM
    • #8
    • 12th Mar 17, 9:02 AM
    Employee's NI 40.92
    Employer's NI 46.92
    Figures from listentotaxman so may vary by a few pence.
    How does this compare to what you have paid?
    Originally posted by chrisbur

    That would add up to around £2k, over the period that I've been working, so I'm even more confused now.
    • chrisbur
    • By chrisbur 12th Mar 17, 9:50 AM
    • 2,794 Posts
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    chrisbur
    • #9
    • 12th Mar 17, 9:50 AM
    • #9
    • 12th Mar 17, 9:50 AM
    That would add up to around £2k, over the period that I've been working, so I'm even more confused now.
    Originally posted by randomfandom
    Would help to un-confuse if you could give your figures. From the last payment of gross £496 give the tax and NI (ees and ers) deducted with other deductions and advise if any expenses are included if so full details.
    • randomfandom
    • By randomfandom 12th Mar 17, 11:01 AM
    • 33 Posts
    • 25 Thanks
    randomfandom
    Would help to un-confuse if you could give your figures. From the last payment of gross £496 give the tax and NI (ees and ers) deducted with other deductions and advise if any expenses are included if so full details.
    Originally posted by chrisbur
    To clarify - £496 is the total amount the umbrella receive from my agency out of which comes all deductions; that's what I meant when I referred to my 'gross'. Secondly, I'm not in receipt of any expenses.

    They don't include 'ers' on my pay-slip. This is the last one I received. (Note that the total net pay is on the low side because it was processed in the same tax week as my previous pay, so I paid tax on a larger amount which I should get refunded on the next payroll.)

    Gross Payments Pay (including basic pay) £379.37

    Holiday Pay 35.00hrs x £1.32 £46.20

    Sub Total £425.57

    Total Net Pay £306.06


    Payroll Analysis This Period Year to Date

    Taxable Gross Pay £425.57 £12,075.21
    Tax £85.20 £382.40
    Employees NIC £32.89 £799.17
    • agrinnall
    • By agrinnall 12th Mar 17, 4:28 PM
    • 18,544 Posts
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    agrinnall
    My calculator makes it £32.47 NIC due on gross pay of £425.57, so their figure of £32.89 is probably right.
    • Tarambor
    • By Tarambor 12th Mar 17, 4:29 PM
    • 1,596 Posts
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    Tarambor
    There is nothing in that list for employers NI. The umbrella company aren't going to pay it out of their own pocket.....
    • agrinnall
    • By agrinnall 12th Mar 17, 4:40 PM
    • 18,544 Posts
    • 14,272 Thanks
    agrinnall
    There is nothing in that list for employers NI. The umbrella company aren't going to pay it out of their own pocket.....
    Originally posted by Tarambor
    It'll have come out of the difference between the amount invoiced to the client (£496) and the gross pay to the OP (£425.57), alng with any fees charged by the umbrella company.
    • chrisbur
    • By chrisbur 13th Mar 17, 10:37 AM
    • 2,794 Posts
    • 1,511 Thanks
    chrisbur
    To clarify - £496 is the total amount the umbrella receive from my agency out of which comes all deductions; that's what I meant when I referred to my 'gross'. Secondly, I'm not in receipt of any expenses.

    They don't include 'ers' on my pay-slip. This is the last one I received. (Note that the total net pay is on the low side because it was processed in the same tax week as my previous pay, so I paid tax on a larger amount which I should get refunded on the next payroll.)

    Gross Payments Pay (including basic pay) £379.37

    Holiday Pay 35.00hrs x £1.32 £46.20

    Sub Total £425.57

    Total Net Pay £306.06


    Payroll Analysis This Period Year to Date

    Taxable Gross Pay £425.57 £12,075.21
    Tax £85.20 £382.40
    Employees NIC £32.89 £799.17
    Originally posted by randomfandom
    I have no experience of umbrella companies all my workings have been with ordinary PAYE so my comments are based on this.
    In my opinion the payslip details are not really full details. There seems to be no explanation of how the £496 becomes £425.57. I assume this is to cover the employer's NI and the umbrella costs but they are not shown. The difference between the £425.57 less tax of £85.20 and NI of £32.89 is £307.48 but the net figure given is £306.06.
    Starting with the £425.57 the tax figure is correct assuming as you say that this payment has fallen in the same tax week as another payment, though whether a refund is due in the following tax week will depend on what is actually paid if anything the following tax week. The tax paid to date is correct assuming a tax code of 1100L and a week number 48 for the payment.
    As has been said the NI is a little high, about 42p. No idea why this should be, could be something to do with how the umbrella company work out NI, cannot help there, only the umbrella company or perhaps someone with more knowledge of them could advise on that. This aside you are paying virtually the same employee NI as someone on PAYE who is getting paid the same £425.57 as you. The bulk of the difference that you saw in the calculator is down to the way NI is calculated for everyone nothing to do with being paid by an umbrella company.
    I suppose the question then is if you were on PAYE would you be getting the same £425.57.
    • randomfandom
    • By randomfandom 15th Mar 17, 8:06 PM
    • 33 Posts
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    randomfandom
    'I suppose the question then is if you were on PAYE would you be getting the same £425.57.'

    My colleagues who are PAYE take home slightly less because their holiday pay is paid whereas the umbrella roll mine up and pay it weekly. So in terms of cold hard cash, there doesn't seem to be that much difference at the end of the day.
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