Everything you need to know
Life as a contractor may involve some tough decisions. Choosing a fantastic,
reliable and personal umbrella company shouldn’t be one of them.
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How your total salary is made up
Whilst working with us your pay is made up in the following way:
Basic Pay The hours you’ve worked multiplied by NMW (National Minimum Wage)
Expenses Your eligible business expenses that you’ve submitted are added on top
Bonus Any bonus that may apply, depending on the income
you’ve generated from the assignment you are on Your basic pay and bonus is subject to tax and national insurance, but your expenses are tax free. If you have a lot of expenses, there may be no bonus at all. Vice versa, if you don’t have any expenses for a particular pay period, you may have more bonus (see the diagram opposite for a couple of examples).
We’ve got a separate ‘payslip explanation’ sheet that breaks down your payslip. This will either be attached to the welcome email you received from us or sent out in the post as part of your welcome pack if you haven’t got access to email. You can also download it from the Resources section of the website.
Margin
To cover the costs of running our business and the relevant insurances, we retain a small margin depending on how much we invoice for.
This is done on a weekly, fortnightly or monthly basis depending on how often you get paid.
As an employee of Liquid Friday you are covered by the following insurance policies:
Public Liability Insurance Professional Indemnity Employers Liability Insurance Personal Accident Insurance
Please get in touch for more detail on the insurances you are covered by, or if you are paid anything other than weekly.
Employers National Insurance
A common question we’re often asked is:
“What’s the HMRC Payment NIERS on my payslip?”
All companies in the UK pay Employers National Insurance, which is on top of the employees salary. If you are being paid directly by a Recruitment Agency or Client then this will be paid by them, often without you really knowing about it.
If you are contracting with Liquid Friday this amount is included within the ‘limited company rate’ (sometimes called umbrella or ‘uplifted’ rate) that we receive for the services you provide. We include this on your payslip so it’s totally clear exactly what’s going on.
This payment to HMRC does not come out of your pay.
Gross Pay £300 + Margin £24 Gross Pay < £150 Margin £8 Gross Pay £150 - £300 Margin £18 Agency
PAYE LiquidFriday
PA YE Ra te / Holida y P ay / Emplo yers NI Limit ed C ompan y Ra te
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Week 1 Worked Worked Worked Worked WorkedWeek 2 Paid!
When will I be paid?
Depending on the particular assignment you are working on you may be paid weekly, monthly, fortnightly or on a project-by-project basis. The vast majority of our employees are paid weekly, every Friday, one week in arrears (see below table).
In most cases your salary will clear in your account first thing Friday morning, but this can take up until 6pm to clear. You can confirm your particular pay cycle either with us, or your consultant if you work through a recruitment agency.
Claiming expenses
Whilst working on assignment it’s likely you’ll have certain costs and ‘out of pocket’ expenses. Depending on the kind of work you do, these may include travel to and from your temporary work place, meals purchased while you are away from home, overnight accommodation, tools, or work clothing. Make sure you keep hold of your receipts when you make these kinds of purchases, we may need them to process your expenses.
We recommend submitting expenses to us weekly using our online portal. If you haven’t got access to the internet then we’ll give you some paper forms you can use. We can backdate expenses, free of charge, for up to 4 weeks. We are able to process expenses older than this but there is an admin fee of £5 per week, up to a maximum of £50.
The Expenses Team are here to help if you need a hand.
Holiday Pay
Whilst working with us you are entitled to 28 days paid holiday. When you fill in your application form you have the choice of getting this paid on an advance basis, so your holiday pay is paid alongside your normal wage each time you get paid. Alternatively, you can have your holiday pay retained by us and then paid out when you take leave.
If you’re having your holiday pay retained we’ll give you a holiday request form. Just fill in the details and either send by email to
Insurances
Being an employee of Liquid Friday you are covered by our insurances. These include:
We always provide copies of our insurances to agencies and clients before we start work with them. If you’d like any details on the insurances you are covered with, just contact one of the Liquid Friday team and we’ll happily send you some more info.
Insurance Cover Public Liability Professional Indemnity Employers Liability Personal Accident Brief Description
Insurance which covers damage, injury or death as a result of your work Provides cover for any claims brought against you for professional negligence Ensures cover for liability for any injury or illness as a result of your work with us Covers you for inability to work as a result of an accident at work, or whilst driving
Pensions
To encourage UK workers to save for their retirement the Government has made a change to the pensions law. This means that from the 1st November 2013, all employees of Liquid Friday between 22 years old and state pension age, earning more than £10,000 per year, will automatically be enrolled in our pension scheme, run by NOW:Pensions.
From the money we receive from the agency (or client) every pay period, we will make a contribution of 1% of your gross salary, 1% is deducted from your salary and you’ll get around 1% tax relief from HMRC. This pensions fund is managed by NOW: Pensions and can be transferred to a new employer if you leave us. Unfortunately, we cannot accept any other workplace pensions schemes you may have already.
We encourage all of our employees to consider long term saving, however you have the right to opt out if you wish. You’ll get an email (or letter) from NOW:
Pensions after your first pay period with full details.
Tax Codes
Your tax code is issued by HMRC and indicates how much money you can earn each financial year (April - March), without paying any tax – also known as your ‘personal allowance’.
The standard tax code changes each year, for this year it’s 1060L. This means you can earn £10,600 per year without paying any tax. If you get paid weekly this means that the first £203.84 is tax free (or £883.33 if you get paid
monthly). Other codes may include:
BR code – stands for Basic Rate. Your entire income is subject to 20% tax, with no personal allowance
D0 code – as above but your entire salary will be subject to 40% (higher rate) tax
K code – if your tax code is pre-fixed with a K it usually means that HMRC are recovering unpaid taxes
Payroll No. Employee Name Process Date NI Number
24513 Liquid Friday 02.04.2015 AB123456C
Company Receipts Units Rate Amount Company Deductions Amount
Basic Hourly Rate 40.00 15.00 600.00 HMRC Payment NIERS 17.77
Expenses 230.00
Company Margin 24.00
Retained Holiday Pay 41.76
Employer Contribution 1.73
Paid to Employee 284.74
Employee Payments Units Rate Amount Employee Deductions Amount
Basic 1.00 260.00 260.00 Tax 15.60
Expenses 1.00 230.00 230.00 National Insurance 15.57
Bonus 1.00 24.74 24.74 Now Pension Deduction 1.73
This Period Year To Date
Total Gross Pay 514.74 Gross Pay YTD 2657.38
Gross for Tax 282.00 Gross for Tax YTD 1408.71
Earnings for NI 284.75 Tax Paid YTD 89.20
Total Deductions 32.90 NI Earnings YTD 1408.71
EE's NI YTD 78.29
Tax Code 1060L
Payment Method Bacs Total Hol YTD 123.92
NET PAY 478.89
Your Payslip Explained
We know that when you get your first payslip it can look a bit daunting, so we’ve
made this guide that explains all…
Your unique Employee Number
The date your
money cleared Insurance NumberYour National The total hours and the rate we
receive from the company or agency you are on assignment with
Company Deductions HMRC Payment NIERS
Employers NI deduction paid by us to HMRC.
Expenses
The total amount of expenses we are processing for this pay period.
Company Margin
Our margin deduction for the cost of insurances and of running our business.
Retained Holiday Pay
The amount of pay that goes to your holiday pot.
Employer Contribution
Our contribution toward your pension fund.
Paid to Employee
This is the total you will be taxed on.
Here you can see any money deducted from what you are paid
This Period:
Summarises your weekly pay information
Year to Date:
Summarises your pay information for the current tax year (the tax year runs from April-March)
Tax Code:
Shows your current tax code (i.e. how much tax free allowance is being used on your income with us)
Total Hol YTD:
Shows all your holiday pay that has been retained to date (this may include holiday that has already been paid out) Here’s your take
home pay for this period In this box is a breakdown of everything
you’ve been paid for the period
Basic
Your total hours x minimum wage
Expenses
The total amount of expenses we have processed for this pay period
Bonus
Any bonus that may be applicable will show here
