Umbrella Companies and over charging NI

Al-boy

I have recently gained some temp work to last a few weeks, this is set up through an agency. On taking the assingnment I was then directed to an Umbrella company who verbally told me their take was £10 pw, which I thought to be very reasonable.

However once their welcome email came through I was shocked to see deductions of a third of the wage, including two lots of NI. One is my (employee cont) the other is the employers contribution which is a bigger percentage. A Google search shows this is rife and many people are frustrated that their income is slashed sometimes by up to 50% of the top line. It seems the Umbrella Co's are operating on the edge of the law and of course HMRC are turning a blind eye as the money is pouring in to their coffers. Parliamentarians dont care as it boosts their pension pot. It small wonder that temp workers, short term contractors and nil hours contractors are angry, but why is no one stepping up to help.

This needs to be addressed there is no legality in charging employees to be their own employers. Someone must know the exact legal stance on this? In the USA there is legal redress through Class Action, do we have similar? Answers please? :mad:

agrinnall

So who do you think should be paying the employer's NI? Your failure to understand how it works doesn't mean it shouldn't be taken out of your gross earnings anyway, the same as it is for every other person working through an umbrella company. I suggest a bit of self-education would be a better idea than wasting your time on a doomed Class Action!

Al-boy

Perhaps you should read and understand what I actually wrote. You assume I dont understand and that Im ignorant, so instead of a logical response its OK to insult me?

getmore4less

there is no extra money heading into the coffers of HMRC if anything it will be less because t he real employer is paying less to employ people this way.

The real issue is people that use umbrella forget the add on the NI before accepting the rates on offer.


Before accepting a job you need at least 25% better closer to 50% of the normal rate as a direct PAYE employee to cover the costs you will be covering yourself.

agrinnall

Al-boy wrote: »

Perhaps you should read and understand what I actually wrote. You assume I dont understand and that Im ignorant, so instead of a logical response its OK to insult me?

I haven't said that you're ignorant, but I am saying that you don't understand how the Umbrella company model works, that's clear from what you've posted.

antrobus

Al-boy wrote: »

..This needs to be addressed there is no legality in charging employees to be their own employers. Someone must know the exact legal stance on this? ..

You are not self-employed; the Umbrella Company is your employer. As your employer they are obliged to operate PAYE on the salary that they pay you, which includes paying employers NIC.

That is the "exact legal stance".

motorguy

Al-boy wrote: »

I have recently gained some temp work to last a few weeks, this is set up through an agency. On taking the assingnment I was then directed to an Umbrella company who verbally told me their take was £10 pw, which I thought to be very reasonable.

However once their welcome email came through I was shocked to see deductions of a third of the wage, including two lots of NI. One is my (employee cont) the other is the employers contribution which is a bigger percentage. A Google search shows this is rife and many people are frustrated that their income is slashed sometimes by up to 50% of the top line. It seems the Umbrella Co's are operating on the edge of the law and of course HMRC are turning a blind eye as the money is pouring in to their coffers. Parliamentarians dont care as it boosts their pension pot. It small wonder that temp workers, short term contractors and nil hours contractors are angry, but why is no one stepping up to help.

This needs to be addressed there is no legality in charging employees to be their own employers. Someone must know the exact legal stance on this? In the USA there is legal redress through Class Action, do we have similar? Answers please? :mad:

You have engaged with the umbrella company to act as your employer and pay you via PAYE, were you expecting them to foot the 14% or so Employers NI from their £10 a week?

:think:

motorguy

Al-boy wrote: »

It seems the Umbrella Co's are operating on the edge of the law and of course HMRC are turning a blind eye as the money is pouring in to their coffers.

How is the umbrella company operating on the edge of the law by correctly passing employers NI contribution to HMRC?

paddyrg

Sorry, the umbrella company is in the right and acting fully legally here. If you earn £100, they have to take that £100, remove their fee, take out the employers NI, take out the employees NI, maybe even take out your holiday pay, take out your payroll taxes, then give you what's left over. Employing people is an expensive business, and the umbrella company is employing you with the money you earn for them to do so. In some circumstances, that could be close to 50%.

RachelWest

Most good agencies will offer two pay rates. One if you go PAYE which is lower as the agency will have to pay the Employers NI and the other is higher to cover the Employers NI so you're not out of pocket.