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<p>Like all employers, umbrella companies are responsible for paying employer National
Insurance contributions (NICs) where they are due. Employers cannot, by law, deduct
employer NICs from an employee's gross pay. The payment of employer NICs out of the
umbrella company’s fee may be shown on the same payslip as deductions, such as Income
Tax, from the employee’s gross pay, meaning that it can look as if an individual is
paying the employer NICs, when this is not actually the case.</p><p>All agency workers
must be given a Key Information Document by an agency before agreeing terms, including
when the agency worker is engaged through an umbrella company. Key Information Documents
set out details about the engagement, including rates of pay. This allows workers
to see how deductions and fees are made through the labour supply chain and how this
affects their gross pay and net pay.</p><p>When set up and operated correctly, umbrella
companies comply with tax and NICs legislation. Umbrella company employees who believe
that an umbrella company is not complying with its tax or NICs obligations can report
it to HM Revenue and Customs:</p><p><a href="http://www.gov.uk/government/organisations/hm-revenue-customs/contact/report-fraud-to-hmrc"
target="_blank">www.gov.uk/government/organisations/hm-revenue-customs/contact/report-fraud-to-hmrc</a></p>
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