If there is one question we see more than any other it is probably the issue surrounding employers National Insurance payments and how we as an Umbrella Company handle them. As an employer we have to pay employers NI. However as our only source of income is the margin we charge to employ you and that margin is much less than any NI payment that would be due the true cost of the employers NI falls on the contractor. Now that both Employee and Employer NI rates are set to be increased by 1.25% it’s not had to see that this could potentially result in a double whammy for contractors employed through an Umbrella Company.
Instead of seeing a decrease of approximately 1.25% in your return this will end up being approximately 2.5%. For this reason it is essential that contractors insist on the uplift rate being payable on as assignment where they are forced to utilise an Umbrella. The uplift is there to cover employer expenses and whilst it is something that should be being used right now, going forward it is going to be even more important. Where 2 rates are advertised for a role make sure that you are receiving the right rate if it is your intention to use an Umbrella. We’re sure that every contractor would have no issue with seeing the same increase as other employees however no thought seems to have been made to this large and very important part of the UK workforce as these changes are rushed through.