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Umbrella workers’ NIC increase is almost double regular workers

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​As we all know the Chancellor has imposed an increase in both employers’ and employees’ National Insurance Contributions (NICs) to take effect from April 6th, 2022. The increase being imposed is 1.25 percentage points meaning the actual rise 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 off payroll working rules so that their take-home pay reflects both employees NICs (eeNICs) and employers NICs (erNICs) contributions. Whilst at first glance this may seem strange and unfair, it is nevertheless true and is explained by HMRC here.

You’ll see that the increase in NICs, which is to become the Health and Social Care Levy next year, will result in many umbrella workers losing almost 2.5% of their current take-home pay rather than the 1.25% of regular employees. This is at the time of spiralling inflation and massive rises in gas and electricity bills. This is a time for recruitment agents and their end-clients to step up to the plate and increase assignments fees to cover the cost to the worker.

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