The national insurance increase for umbrella workers is almost double that of normal workers

The Chancellor will increase the National Insurance Contributions (NICs) for both employers and employees, effective April 6, 2022.

The imposed increase is 1.25 percentage points, which means the actual increase is about 9% for employers and 10% for employees.

For some time, most freelancers working for end clients through an umbrella company have been driven by the rules of work, reflecting the contributions of both their take-home payroll employee NICs (eeNICs) and employer NICs (erNICs).

While this may seem strange and unfair at first glance, it is true and explained here by HMRC.

Chris Bryce, Chief Executive, FCSA, said: “From April 2022, umbrella workers will be doubly affected by the increase in the Chancellor’s National Insurance Contribution.

“It’s time for recruiting agents and their end-clients to move forward on the plate and increase assignment fees to meet staff costs.”

The rise in the NIC, which will turn into a health and social care levy next year, will cause many umbrella workers to lose about 2.5% of their current tech-home pay, instead of the 1.25% of regular employees. This is at a time when inflation is on the rise and gas and electricity bills are skyrocketing.

FCSA represents many UK umbrella companies and FCSA members have a total of c118,000 freelancers in their books, all of whom will be affected by the rise of NIC.

From April 2022, umbrella workers, like all other employees, will pay employees an additional IC 505.40 on the NIC, but the employer’s additional £ 514.50 on the NIC will further damage their home pay.

This is clearly unfair, and FCSA is asking its members to work with their supply chain, employment agencies and end-users, so that end-users increase the assignment rate for this increase so that the extra burden created by NICs does not fall on workers.

The FCSA is urging the Chancellor to cancel these enhancements to the NIC altogether or, if it fails, the employer to introduce an amendment to the NIC to increase the rate of assignments given to end-users by their freelancers.

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