The Freelancer & Contractor Services Association (FCSA) has highlighted that according to HMRC’s current guidance on umbrella companies, an umbrella company worker will pay twice as much NIC as a PAYE employee and will see their take-home pay reduced further.

The FCSA, which represents 118,000 freelancers, states that this will hit freelance and umbrella workers even harder during the current cost of living crisis and is ‘clearly unfair’.

As described in HMRC’s current guidance, in an umbrella company relationship, the umbrella company is classed as the employer, and it is legally liable to pay employment taxes. The umbrella company, therefore, charges an ‘assignment rate’ to its end-client which factors in employers’ NICs, and the umbrella company margin.

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