IR35 and Umbrella Companies - Am I an employee or an employer

DE_612183

Consumer Rights is about stuff you buy - so it's not applicable.

PPI is about Payment Protection Insurance - so that does not apply either.

Are you saying that a job advert may be "mis-selling"?

The whole point about being a contractor is you are not an employee in the terms of your contract, but if you have ti pay NI them you have to pay both employers and employee's - that's the world of contracting and has been for the last 20 odd years - that is why contract rates are usually higher than salaried posts to make up for this - you can't have your cake and eat it.

When you talk about IR35 - there are two sides to that - if you are INSIDE IR35 you are deemed to be an employee, so you pay NI & Income Tax.

If you are OUTSIDE IR35 - you are under no obligation to pay NI or Income Tax, but instead you'll end up paying corporation tax which will work out more expensive.

Most contractors OUTSIDE IR35 will choose to pay themselves about £12,700 per annum and the rest via dividends thus maximising their tax allowance.

If you don't understand this, then you should employ an accountant to do it for you.

DE_612183

as an aside the MS Take Home Calculator is for salaried staff NOT contractors - the agency that you contract through will advise you of the best income calculators for the type of contract you are using.

Marcon

presuminged57 said:

Its purely anecdotal by I have spoken to three permies, a colleague, a close friend and my wife, all of which could be argued are more intelligent than I am, and none of them were aware that their employers made NI contributions for them.

As a side note I have been in conversation with an professional organisation who deals directly with IR35 and the issues round it and an hour ago I received a communication from them where they directly and unambiguously stated that to work inside IR35 is to pay employers NI. I am happy (well not exactly happy) to be corrected but in all of my analysis of IR35 on contractor websites and forums I have not been able to find any source that can support this claim.

Hard to believe that so many people could all have had payslips which never included details of employer's NI and/or failed to read a payslip at any point in their working life, and that they've all managed to avoid every single reference to employer NI each time it has been discussed on the radio and TV, in the press and on social media.

Have you read the link I provided in my previous post?

Go back and ask this 'professional organisation' for chapter and verse. 

presuminged57

Thank you Marcon for your feedback. It’s greatly appreciated.

I apologise if my previous posts were ambiguous. The anecdotal examples were of people who clearly did know that they paid NI contributions as shown on their monthly payslips. What they were unaware of was that all employers in the UK are required to pay employers' NI contributions on their employees'earnings.

i have reviewed the link you sent and again thank you . However regrettably it was not able to tell me anything that I didn’t already know. 

My concern of all of this is the ambiguity of the whole enterprise which in turn could potentially have implications with Consumer Rights which, as I’m sure you are no doubt aware, relates not only to the purchase of goods but also services, Consumer Duty regulation, and if concerning mis-selling of services. hidden costs and misleading information directly links to the legal principles of underlying PPI reclaim.

I am very grateful for your feedback and information and by all means respond back if you wish but for now I will probably no longer continue this thread. Cheers.

unforeseen

As contracting through an umbrella company is a business contract I fail to see how CRA comes into it

Marcon

presuminged57 said:

Thank you Marcon for your feedback. It’s greatly appreciated.

I apologise if my previous posts were ambiguous. The anecdotal examples were of people who clearly did know that they paid NI contributions as shown on their monthly payslips. What they were unaware of was that all employers in the UK are required to pay employers' NI contributions on their employees'earnings.

i have reviewed the link you sent and again thank you . However regrettably it was not able to tell me anything that I didn’t already know. 

Then it's a bit hard to see why you are still asking the question about employer's NI, assuming you clicked through on the link to the LITRG's Umbrella Factsheet https://www.litrg.org.uk/sites/default/files/AST5500.pdf and read the section headed:

How much will I be paid if I work through an umbrella company?

and didn't learn anything you didn't already know. 

presuminged57 said:

My concern of all of this is the ambiguity of the whole enterprise which in turn could potentially have implications with Consumer Rights which, as I’m sure you are no doubt aware, relates not only to the purchase of goods but also services, Consumer Duty regulation, and if concerning mis-selling of services. hidden costs and misleading information directly links to the legal principles of underlying PPI reclaim.

There are certainly some naff answers (and practices!) around, especially if you google, but the factsheet seems to me to be both accurate and admirably clear - but the whole issue has absolutely nothing to do with PPI or consumer duties. The protections arise in wholly different ways, as itemised here: https://www.gov.uk/guidance/responsibilities-for-employment-businesses-working-with-umbrella-companies#what-happens-if-you-work-with-umbrella-companies-that-do-not-follow-employment-and-tax-law

sheramber

Neo QLED, OLED, QLED, Lifestyle TVs 

Marcon said:

presuminged57 said:

Thank you Marcon for your feedback. It’s greatly appreciated.

I apologise if my previous posts were ambiguous. The anecdotal examples were of people who clearly did know that they paid NI contributions as shown on their monthly payslips. What they were unaware of was that all employers in the UK are required to pay employers' NI contributions on their employees'earnings.

i have reviewed the link you sent and again thank you . However regrettably it was not able to tell me anything that I didn’t already know. 

Then it's a bit hard to see why you are still asking the question about employer's NI, assuming you clicked through on the link to the LITRG's Umbrella Factsheet https://www.litrg.org.uk/sites/default/files/AST5500.pdf and read the section headed:

How much will I be paid if I work through an umbrella company?

and didn't learn anything you didn't already know. 

presuminged57 said:

My concern of all of this is the ambiguity of the whole enterprise which in turn could potentially have implications with Consumer Rights which, as I’m sure you are no doubt aware, relates not only to the purchase of goods but also services, Consumer Duty regulation, and if concerning mis-selling of services. hidden costs and misleading information directly links to the legal principles of underlying PPI reclaim.

There are certainly some naff answers (and practices!) around, especially if you google, but the factsheet seems to me to be both accurate and admirably clear - but the whole issue has absolutely nothing to do with PPI or consumer duties. The protections arise in wholly different ways, as itemised here: https://www.gov.uk/guidance/responsibilities-for-employment-businesses-working-with-umbrella-companies#what-happens-if-you-work-with-umbrella-companies-that-do-not-follow-employment-and-tax-law

But you are not telling him what he wants to hear.

DullGreyGuy

presuminged57 said:
A Hypothetical

I am a wet behind the ears new contractor who is looking into a role for £250 pd (Inside IR35) for a contract that lasts a year.

I go into MoneySavingExpert's income tax calculator work out that approximately I can expect to earn £250 * 235 (Approx number of working days a year (minus 4 wks holiday) or £1,250 per week. I conclude I am happy with this rate as it meets with my financial obligations. I accept the role.

There are a lot of "wet behind the ears" people all over the place... back in my call centre days you'd always get one school leaver getting their first pay cheque and finding out that they had tax deducted from their pay that was a shock to them. We similarly get people coming on here not realising anything about BIK on a company car or work provided private medical insurance etc. 

Just because people dont know about things doesn't mean it's wrong or that others dont know about them. 

In my experience, most agencies are willing to work with a range of umbrella companies and so they couldn't advertise a single fixed to you day rate because each umbrella has a different margin. Similarly your pay will depend on what you do about pensions, holidays etc. 

Just as employees learn about income tax and BIK a contractor will also quickly learn about IR35, how umbrellas work etc.