Tax and National Insurance

When working through an umbrella service such as your umbrella, you will have tax and National Insurance contributions deducted on a weekly basis under PAYE tax (pay as you earn). It is deducted from the part of your wages which is not paid back to you as expenses.  

The benefit of PAYE is that you are always up to date with your tax and National Insurance contributions, and therefore you will not owe any tax at the end of the year as long as all the information supplied to HMRC is correct. For this reason, it is very important that you provide your umbrella with your P45 when you register so we can ensure you are paid under the correct tax code.

What other providers are too scared to tell you

You will notice on your pay slip that there is a deduction for employers National Insurance. Any employment in the UK requires the payment of National Insurance by both the employee and employer. In the case of an umbrella company provider, there are insufficient funds available in order for us to pay the employers National Insurance (our only income is the fee we charge and that won’t be enough to keep HMRC satisfied) so therefore we have to take this payment from your taxable pay.

Don’t panic though, this doesn’t mean that you lose out! As we’ve mentioned your umbrella is magic in that by offsetting your expenses you are still better off than you would be otherwise through a normal PAYE system at your agency. The good news is this is why your agency will pay you an uplift.

Sometimes it is better to see the figures rather than read about it, so why not try our calculator now so you can see for yourself how it works.

If you have any questions do not hesitate to call us on 0844 854 5225 or live chat to us now.