The amount shown as Gross Payment on your payslip is based upon the minimum wage/living wage portion of your earnings, allowing for the statutory deduction of pension contributions.
These are shown as one figure on your payslip. Chargeable expenses are any costs that your agency or client has agreed to reimburse to you. Chargeable expenses will usually be invoiced through Contractor Umbrella and may well require an expense form, signed by the client, to support the claim.
From the contract value, we deduct the gross payment and expenses as described above. The balance is subject to Employers National Insurance and Employers Pension, once that deduction has been made the residual amount is treated as a bonus payment.
Employment law requires employees to receive a certain amount of paid holiday leave a year. In order to be able to comply, we make a deduction from each payment at 12.07% of your taxable salary; this is dependent on the period being paid (weekly or multiples of, or monthly). This deduction is either paid straight back to you within your weekly or monthly pay, or if requested, we will accrue this throughout the financial year. Via the portal, if opting to accrue holiday, you will be able to see the amount in the pot and reclaim this when you decide to take annual leave.
Should you leave the company, any holiday deducted but not repaid for holiday leave taken, will be paid back to you with your final timesheet, or at the end of the holiday year (March).
PAYE TAX & TAX CODES
The PAYE Tax shown on your payslip is the income tax we are required to deduct from you and pay to the government. The amount deducted is based on the tax code operated which will have either been advised to us by the tax office, or, if you are a new contractor, via your P45 or HMRC Starter Checklist form. Your tax code is shown in the bottom left hand corner of your payslip. If you believe your code is wrong, please contact HMRC to request a revised coding. You will need to have your NI number and our Employer Reference Number (419/GZ23909) handy when calling. They are contactable on 0300 200 3300.
EMPLOYEE NATIONAL INSURANCE
Legislation requires all employees to pay a national insurance contribution based on their earning (unless they are exempt by virtue of being over retirement age and have provided us with the required evidence). This is shown on your payslip as EEs National Insurance.
ER’s NATIONAL INSURANCE
All UK employers, including umbrella companies, are required to make payments each month to Her Majesty’s Revenue and Customs (HMRC) for Employers’ National Insurance Contributions. Currently this contribution is taken as a percentage of 13.8% of earnings over £162 per week.
As of April 2017, we are also required to make payment for the Apprenticeship Levy to HMRC. The Levy is taken as 0.5% of earnings subject to Class 1 Secondary NICS. You are our employee which means that you are paid through PAYE (Pay As You Earn) and your salary is linked to the rate, which is agreed in the contract between Contractor Umbrella Ltd and the relevant recruitment agency or client. We raise an invoice to the agency/client for hours worked at the contract rate; from this we retain a margin (currently £25.00 per week or £95.00 per month) and we make a payment to HMRC for Employment Taxes. The remainder is paid to you as a salary, which is then subject to deductions for income tax and Employee’s National Insurance contributions and we will pay this to HMRC along with your PAYE tax and employee’s NI.
Employment law requires employees to receive a minimum amount of pay for each hour worked. The rate is usually revised annually; we base our minimum wage rates upon the London Living Wage. If you submit a timesheet to us showing hours you have worked but we do not receive payment from your agency before the end of the month, we will make a Minimum Wage payment to you. This will be based on the hours submitted and the prevailing minimum wage rate. When we finally receive payment from the agency, we will pay you the balance of what is due.
Our system allows us to make multiple payments to you in one tax period without having to apply a rollback (as detailed below). The correct tax deductions will be calculated and the remaining funds will be processed to you as if you were receiving one payment in the period.
If we make a payment to you and then receive payment for a second or subsequent timesheet within the same tax period you will notice the PAYE deductions will be higher in the second pay calculation. This is due to the tax free allowance being utilised in the first payroll calculation and therefore all income is taxed in the second payment which may push into a higher tax bracket.
This is a deduction we have been instructed to make to repay your Student Loan. The amount deducted is forwarded to the government for credit to your Student Loan account.
As an employee of Contractor Umbrella, you have access to our Employer Pension Scheme, which is operated by Scottish Widows. The scheme is designed to provide you with a low cost, flexible plan to reflect and adapt to the terms of the contracts you accept and ensure that you can continue to fund for your retirement whilst maximising your tax benefits.
If you are in the pension scheme, the amount shown on your payslip will be paid over to the scheme for you.
The Pensions Auto Enrolment percentages for Employee and Employer contributions from April 2020 are set to 5% and 4% respectively as we operate the ‘equal to basic pay’ scheme. We will calculate the auto enrolment amount based on the actual hours worked at National Minimum Wage, currently £8.72 per hour. For those with a daily rate it will be assumed that your working week is 37.5 hours unless the B2B contract states differently.
If you wish to set a fixed or larger amount for your pension, then please do let your Contract Manager know and they will ensure this is set up for you.
This is the amount that will be paid into your bank account. Please ensure you advise us of any changes to your account details so that your payments are made to the correct account.
The CU Margin is the amount we retain from the invoices we raise on your behalf for the work you undertake; this is a fixed amount for each week/month.
We hope the above has helped to explain your payslip. However, if you do have any questions please do not hesitate to contact our Payroll department. Alternatively, you can speak with your Contract Manager who will also be happy to help on 01206 761 326.