This is a common and imperative understanding that when you are associated with a company in the role of an employee, the employer’s national insurance contributions are practised by your employer. However, there are some individuals who are being paid by umbrella companies or through the PAYE system with the involvement of recruitment agencies as well. The same company will stand liable to pay its associated employees. People often enquire about what is HMRC payment NIERS on my payslip. Since the deductions make several workers confused about what is it all about.
Now when we talk about the employees who are getting their salaries through limited companies or umbrella companies, the HMRC payment NIERS deductions will be there. Further in the discussion of this article, we will focus on answering the frequently asked questions involving what is HMRC payment NIERS on my payslip, how is it calculated, whether is it applicable if I am paid through an umbrella company and why it seems like my rates are increased.
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HMRC Payment NIERS – Why is it On My Payslip?
NIERS stands for National Insurance Employer’s Contribution. When you are residing and working in the UK, the employers of your company make a contribution to the national insurance of each employee of the company. It is generally known as class 1 secondary contribution. To sort out the computing matter, there is a specific way to calculate HMRC payment NIERS. The specific rate is needed to be considered as well. To ensure the working process is seamless, this is to be considered on serious terms. The income you are earning on a weekly basis, if crosses a certain limit, you will be liable to NIER.
For some employees who are working for umbrella companies and get their salaries from the company payroll system, there will be relevant deduction details on your payslips. This is part of practice because of the one possible reason whether the company intends to operate the PAYE system now so that the contribution of the national insurance as an employee can be done.
What is the Procedure to Calculate HMRC Payment NIERS?
Let’s take the example of an individual who is working off the payroll in the role of a contractor. The agency he works for provides the amount of salary direct to the employees which means they are not using the PAYE system. Now let’s suppose that the contractor is paid an amount of £600 for one day. Working for five business days, he will be able to make £3,000 amount of money. This is supposed to be a result of £600 x 5.
According to this example of weekly gross salary, the contribution of the employer for the national insurance will be £170. The calculation will be derived for NIERS as mentioned below:
Weekly Gross earnings = £3,000
Less – Secondary Threshold = £170
Pay Subject to NIERS = £2830
Is NIERS Applicable If I am Paid Through an Umbrella Company?
Most of you must be getting paid through an umbrella company and wondering what will be the scenario in your case. An Umbrella company when comes to the role of an employer is liable to contribute to national insurance to pay for the role. So whether you are associated with an umbrella company or an agency, they are liable to ensure that the National Insurance Employer’s Contributions is done well. This means you do not need to worry over the contribution of national insurance on the employer’s role no matter if it’s an umbrella company or any other agency.
Will Your Rates Increase if You Move to An Umbrella Company?
People tend to enquire whether NIERS has the ability to affect any of their rates. However, this is not the case and you need to stop wondering about it. All other costs of business expenses and the NIERS are included in the rates that are agreed upon. So there will not be any disturbance or change due to NIC in your rates. This is also considered to be the assignment rate and the umbrella company takes the responsibility for the national insurance contribution for the contractor.
Moreover, there are a few deductions in the rates that are agreed upon by the umbrella companies before you receive them. This is because of the fact that they will pay HMRC and they will have to ensure an error-free procedure for NIERS. When you are new to switching to an umbrella company, you will suddenly experience a raise in the rates. Now the agencies will provide information to the umbrella company and they will directly handle the NIERS affairs. However, you must keep track of the difference between the rates of the PAYE rate and the assignment rate. This will ensure that you are getting the right amount of money that you actually deserve.
The Bottom Line
Now that you have gathered a fair amount of information about HMRC payment NIERS, we say that national insurance contribution by the employer for the sake of a fair role is equally imperative as it is in the case of an employee. However, you should keep the right track of the details to ensure that the amount of money that you are being paid is accurate and equal to just as you deserve. We hope these few minutes of reading will help you to develop a better understanding of national insurance contribution and HMRC payment NIERS.
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Disclaimer: All the information provided in this article on HMRC payment NIERS, including all the texts and graphics, is general in nature. It does not intend to disregard any of the professional advice.