As your employer, TJW will retain employment costs from the income that we receive from your agency.
We contract with your agency for an agreed ‘contract rate’. We then calculate and retain these Employment Costs (Employer’s National Insurance, Apprenticeship Levy and, where relevant, Employer’ Pension Contributions) from the contract income we receive.
The remainder of the contract income is available as your Gross Pay, on which we calculate and deduct PAYE, Employee’s National Insurance and, where relevant, Employee Pension Contributions. The balance is your net pay.
All PAYE, National Insurance Contributions and Apprenticeship Levy fees are reported and paid to HMRC; all Pension Contributions are paid to our pension provider, NOW:Pensions.
Moving from your PSC/LTD company?
Currently, your LTD company is your employer and has the responsibility of paying employer costs on the salary paid to you by your company, although in reality many LTD contractors pay themselves a salary below the threshold which doesn’t attract Employer National Insurance (or Employee National Insurance and PAYE). When operating through an umbrella company, responsibility for paying the employment costs still falls to the employer – in this case the umbrella company.
Moving from perm/direct PAYE?
If you are directly paid by your agency or client at the moment, the employment costs are calculated and paid in the background, prior to your personal PAYE/National Insurance calculations. Your client or agency will pay these costs directly to HMRC. When using an umbrella company, your contract rate is inclusive of the employer costs, which we retain and pay on instead.