Umbrella companies NI

Re: Umbrella companies NI

lolly — Mon, 15 Feb 2010 11:39:34 GMT

Tell me about it. I had a 'disagreement' with RIG about this as they kept contacting me as I made an enquiry with them once about 2 years ago and that's it once they have your number..... Anyway, because I am not qualified but am experienced they offered me a weeks work at £8 per hour. I agreed as I have been out of work since May but haven't looked at locuming before as not being qualified it's not usually an option for me. To cut a long story short, after talking to Eden and finding out I would be paying them to pay me and paying employers NI I would bascially take home about £6.20 an hour! Had a row with RIG and pulled out of the locum position - which I felt very bad about as i was due to start two days later - but I felt exploited as RIG knew I had never locumed before and therefore when I agreed to £8, I thought it meant I would take home £8!

Re: Umbrella companies NI

suzanne vn — Sun, 14 Feb 2010 16:06:30 GMT

Thank you everyone. I understand it now. cant believe Rig get that amount from us for not doing much really!!!!

Re: Umbrella companies NI

Victoria Nielsen RVN — Sun, 14 Feb 2010 12:32:28 GMT

Oooh thank you!! :)

Re: Umbrella companies NI

Victoria Nielsen RVN — Sun, 14 Feb 2010 12:31:59 GMT

Hey,

I am a locum and I'm currently with Danbro Umbrella Company. I've just noticed that (I've been working as a locum for five months!) So I've contacted Danbro to ask them why. They're excellent so they'll give me a straight answer. I believe it might be because we are effectively self employed and as well as contribute to our own National Insurance benefits, because we are not insured within the practice as a permanent employee, we have to pay towards the Employer's too? I don't know. I will ask myself as well as now very curious!

If I find out before you do, I will post on here!

Regards,

Vicki RVN

Re: Umbrella companies NI

Louise B — Sun, 14 Feb 2010 12:29:48 GMT

Hi Suzanne,

It'll be because if you are PAYE then an employer has to pay their share of NI contributions for you. Because you are going through an umbrella company the practice you locum for doesn't have to pay your NI contributions as, effectively, the umbrella company is your employer. But, you are also effectively hiring the umbrella company to be your employer and to handle your paperwork. However, the amount you pay per week to use them covers them to handle your paperwork and turn a profit. The amount you pay (and others pay) is not enough for them to pay your employer contributions too. If that was to be done then they would need to reorganise their billing structure such that they charged you for being with them:

* A flat fee/week for processing claims

* Plus,

* X% of everything you earnt above the NI lower threshold (amounting to at least the amount you are currently paying as an employer NI contribution)

So, effectively, this is what they are already doing. They just haven't made it explicit/phrased it that way.

I am assuming that RIG don't pay the umbrella company the money equivalent to this employer NI out of the money that they earn for placing you. I could be wrong though - if I am I am sure RIG will be quick to point this out - but, if they don't then it is another reason to not use RIG. Find the practices yourself and charge more per hour (you can still undercut RIG).

Rig bill the practice approximately £15/16ph for your labour. This is 12.8% on anything earnt over £110/week. You might get £10/ph from the locum job.

Assume you work a 41 hour week and earn £410/week. Rig earns £205/week from your labour.

The employer NI contribution is 12.8% on £300 (everything over £110). This equates to: £38.40.

If you charged £1.50 more (£11.50ph) and went to employers directly you could cover your employer NI, turn a small additional profit and still under cut RIG by £4.50/3.50ph making you a more popular option than going through RIG!!!

Hope this helps.

Re: Umbrella companies NI

albatross — Sun, 14 Feb 2010 12:22:25 GMT

yes it is corret. Every umbrella company charges you for both. Normally a company pays employers and you pay employees, but the umbrella company won't directly pay it even though indirectly they are the employer (and so working out the tax etc for you), and so you have to pay both as someone has to.
If RIG was the direct company then they would pay it, a lot of agencies do direct deductions and don't force you to go self-employed or use an umbrella company.

I did some IT consulting a few years ago, and had to pay both and also umbrella company fees of around £100 a month.....silly game.

Or you can register as self-employed and pay NI by direct debit, or declare exemption if you aren't going to earn over £5K at least in this tax year. I have to be self employed through my little charity vet clinic job and do all the paperwork in a tax return each year.