Hi I'm looking for some guidance please. We run simple payrolls for some of our clients.
One of our non-payroll clients, Company A (IT consultant), contacted us and said they needed to take on some extra help for a contract. We duly set up a payroll scheme for them. I admit, we were a bit confused when the client explained what they wanted. Company A are invoicing Company B for employee A's services at a daily rate of £xxx + VAT. Company B pays Company A's invoice 4 weeks later and we process the pay for employee A - daily rate £xxx, deducting the usual PAYE/NIC, and an admin charge also at a daily rate.
Now I've got the first payrun ready and the client is asking us to also deduct the Er's NIC from employee A's pay. Is this legal? And if so does anyone know how to do it correctly using Sage Payroll?
Apparently employee A has had Er's NIC deducted from their pay in previous employment. This sounds like an umbrella arrangement to me. On digging around HMRC website it looks like we have to apply the 'agency rules'. I'm wading through them now to find where/how Er's NICs can be charged to the employee. I've never dealt with anything like this before - any guidance would be appreciated.
Thanks
Christina
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Dig deep enough and you'll probably find the details for calculating your client's gross pay (by excluding, inter alia, admin fees and secondary NI), from which tax and primary NI are deducted.
Thanks Lion but I'm finding this issue really confusing. Everything I've found seems to relate to paying company directors. Or deemed payments. I can't find anything about paying an employee and charging them the employer's NIC also. Is Company A trying to have their cake and eat it? Or am I being really dense?
Umbrella companies are there to save you the hassle of being a company director. For a fee, obviously.
Once again, look at the contract.
