Do Contractors Pay Employers NI

Hi

I have an employment contract with this umbrella company and according to them I'm fully employed (I'm not a LTD company) by them.

I do understand the article 'Why Should I have to Pay Employer's National Insurance', but what i don't understand is that i receive a statement showing employers NI being deducted but it does not reflect on my payslip and this is on top of an administration fee (%) they deduct from my weekly salary.

I spoke to HMRC and they said it should not be like that and when i told the umbrella company this they refused to comment and said i must get someone else if i don't like their service and how they do things.

Thanks for your help.

Alison

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Hello Alison

I assume that you obtain work via a recruitment agency and have signed up with an umbrella company. The purpose of the umbrella company is to provide you with continuing employment which will span assignments and as a result you are able to claim tax relief on travel expenses that would otherwise not be available.

The end user pays the agency who then, less agency commission, pays the umbrella company. The umbrella company as your employer is liable to pay Employer's National Insurance and it does so out of the money paid to it by the agency.

That National Insurance is paid to the government - in order to operate and provide the employees with a tax compliant, travel expense solution the umbrella company must charge an administration fee with the balance being paid over to you as gross expenses or remuneration net of personal National Insurance and income tax and all this can only come out of the money that is paid over by the agency.

Every umbrella company operates in a similar way.

Bob Jones
Independent Expenses Expert