One of the questions regularly asked by contractors working through Umbrella.co.uk is about the “extra costs” which are payable by contract workers.  We are often told that our workers have previously found it hard to get to the bottom of what these costs are for, and that other payroll providers are reluctant to break them down for them.

Umbrella.co.uk prides itself on being upfront and transparent about any deductions that are made from income generated.  We will talk every potential new customer through the charges before you join us and will itemise them on your payslip each week so you know exactly where your money is going, and how the figure for net pay is arrived at.

All employed workers have standard PAYE (income) tax and Employee’s National Insurance Contributions (NIC) deducted from their earnings at source.  The umbrella company must also pay the Employer’s NI contribution, the Apprentice Levy and the Employer’s workplace pension contribution, although the pension is optional and the right to opt-out exists.  These costs are taken into account before calculating the contractors' gross pay. Service providers will also retain a margin for their service.  This is the only item retained from income that goes to the service provider.

All of the above employment costs are retained from income generated before tax and NI is calculated.

You will also find that the recruitment agency which is placing you in a contract will quote you the “limited” pay rate which takes into account the extra employer costs involved in working through an umbrella company.

If you have any questions about employer costs our experienced Customer Services Team are available to explain further. Call 01625 546 610 or email team@umbrella.co.uk