Agency charging me employer's Nat Ins 28 June 2010 at 9:36PM edited 30 November -1 at 1:00AM in Cutting Tax 6 replies 1K views

terryw

Help! I am sure some MSE peeps can help me out here.

I have done some work through an agency who have the pay calculated and paid via a payroll company. My first payslip reads:

Gross £951

less
payroll processing fee £44.18

employers N.I £90.42

£816.40

less

income tax £163.20

employees N.I. £77.70

Net pay paid £575.50

I am quite happy with the income tax - this is correct. The payroll processing fee looks to be a bit underhand but I must accept it - I wish that I could tender for this as I would be happy to do this for £5, but hey-ho what can I do.

What really niggles me is the fact that I have to pay the EMPlOYERS national insurance. Surely this can't be legal - or have I missed something?

Any thoughts or suggestions welcome.

Thanks in advance

System

It sounds like the agency are acting as an umbrella company hence you having to pay employers NI as well.

terryw

!!!!!! wrote: »

It sounds like the agency are acting as an umbrella company hence you having to pay employers NI as well.

Thanks !!!!!!. What on earth is an umbrella company and why do I have to pay the employers n.i.? Forgive my ignorance.

thanks

terryw

System

A quick description is at http://www.umbrellacompanies.org/umbrella-companies-explained/.

There is a tax advantage for you as you are not an employee of the agency, I believe that there is also a tax advantage to the agency by acting as one.

It is standard practice to pay employer NI as an employee of the umbrella company.

terryw

Thanks very much indeed for the link explaining umbrella companies. The main advantage is that any "expenses" can be deducted from the gross pay so that income tax is paid on the reduced figure. For myself, and I think for most people, any such saving would be more than negated by the payroll processing fee.

Unfortunately there is nothing in this link explaining or even mentioning the worker having to pay the Employer's National Insurance.

System

http://www.commonwealthcontractors.com/Umbrella_Companies_and_Employers_NI.html is probably the best description. You are treated as freelance and therefore have to cover Employer NI out of your own money.

Fiddlestick

terryw wrote: »

Gross £951

less
payroll processing fee £44.18

That's a bit pricey. It's what, 5%?

There are umbrella companies out there that will do your payroll for a flat fee rather than a percentage.

It's been a couple years since I last contracted, but when I did I used Green Lantern 35 and I'm pretty sure it was a flat fee