The Chancellor will impose an increase in both employers’ and employees’ National Insurance Contributions (NICs), which will 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.
Chris Bryce, Chief Executive, FCSA says, “From April 2022, umbrella workers will be doubly impacted by the Chancellor’s mooted increase in National Insurance Contributions.
“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.”
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.
FCSA represents many of the UK’s umbrella companies and FCSA Members have a total of c118,000 freelancers on their books, all of whom will be affected by the rise in NICs.
As an example, taking an umbrella company employee earning £50,000 per year:
| Tax Year 21/22 | Tax Year 22/23 | £ Increase | |
| erNICs | £5680.08 | £6194.58 | £514.50 |
| eeNICs | £4851.84 | £5357.24 | £505.40 |
From April 2022, the umbrella worker, like all other employees, will pay an extra £505.40 in employees’ NICs, but their take-home pay will also suffer further because of the extra £514.50 of employers NICs.
This is clearly unfair, and FCSA is asking its members to work with their supply chain, the employment agencies and end-users, to ensure that the end-users increase assignment rates to account for this rise so that the extra burden caused by the NICs increase does not fall on the worker.
FCSA is also urging the Chancellor to cancel these increases in NICs altogether or, failing that, to introduce an amendment requiring the end-users to increase the assignment rates paid to their freelancers to account for the rise in employer NICs.
Top 10 umbrella companies
Are you looking for a new umbrella company that you can trust? You’ve come to the right place! We have put together a list of our top 10 umbrella companies, and they’re all accredited by either the FCSA or Professional Passport – so you know you’ll be in the very safest hands!
