Whether it's your first time contracting or you are a seasoned individual, there are some questions that we see popping up frequently. Here, we explore some important FAQ's about Umbrella PAYE to put your mind at ease!
Why am I paying the Apprenticeship Levy - I'm not an apprentice?
The Apprenticeship Levy is a tax the government introduced back in 2017 to encourage employers to offer more apprenticeships. The Levy applies to all businesses that have a turnover of £3million or more; as Clipper Contracting falls within this bracket, we have to make a small deduction from the contract sum that we receive to pay towards the Levy. Note - the Levy does not apply to self-employed workers.
What's an SDC assessment?
An SDC assessment is a consultative assessment Clipper Contracting will carry out with you over the phone, to ensure you are not working under supervision, direction or control (SDC) in the manner in which you carry out your work. For example, we may need to carry this out to demonstrate you are genuinely self-employed or for some employees where they wish to claim mileage expenses. The assessment is a series of 6 open questions so we may understand the assignment you are undertaking and the tasks you are completing.
Why am I paying Employer’s National Insurance?
A common misconception is that an employee engaged through an Umbrella company pays two sets of National Insurance – both the Employee’s, and Employer’s. This is simply not true – the Employer’s NI deduction is a company cost paid by the employer (Clipper Contracting) and should be factored into the contract sum (assignment rate) by the recruitment agency. We are required to deduct and pay this as part of our company costs, leaving your taxable pay. If the worker was engaged directly through the recruitment agency or end-client, the Employer’s National Insurance and other company costs will still have to be paid - they need to be factored in somewhere in the supply chain. This typically leads to the agency offering what appears to be a lower rate of pay than that of the all inclusive Umbrella rate. We provide a detailed explanation and pay illustration upon registration and supporting documentation by email, to thoroughly explain the various deductions and the net pay a worker should expect, prior to payment.
I do not wish to have pension deducted - how do I opt out of pension contributions?
Our pension provider, Nest Pensions, will send you a welcome pack via email, usually a week after you have been enrolled into the pension with Clipper Contracting. The welcome pack is extremely important; within that you will acquire you 'Nest ID' which will allow you to contact Nest Pensions directly and request to opt out of the pension scheme. Shortly afterwards, Clipper Contracting will receive notification of the opt-out and we’ll be able to refund up to 4 weeks of pension contributions. Please note this can take up to a week so don’t be alarmed if a further pension deduction is made. Contact Nest pensions with your 'Nest ID', or to discuss increasing contributions. They can be contacted on 03000200090.
How does the holiday pay work?
Even as an employee on a temporary contract, you are entitled to holiday pay. This is included within the contract sum (assignment rate) that the recruitment agency will agree. We calculate holiday pay at 12.07%, which equates to the standard 20 days holiday plus and 8 bank holidays, and accrue this each time you are paid. Therefore, holiday pay will be stored on your behalf ready to be requested and taken should you take any leave, covering any period where a timesheet is not submitted. If you do not wish to accrue holiday pay, we can send an electronic waiver to your email for you to agree, allowing us to advance the holiday pay and include it each week.
When will I be paid?
The all important question! Providing Clipper have received your hours from the agency in time with our deadlines, you will be sent a confirmation text and payslip on a Wednesday/Thursday, and join the majority of our workers who are paid overnight on Thursday, with the funds clearing early hours Friday. However, our pay day is a Friday, so we do pay right up until 4pm on Friday. If you haven’t received any notification by Thursday evening, please do give us a call and we can look into it. You must have the appropriate right to work in the UK, and to have completed our registration process before payment can be made.