Life decisions can be tricky. Buy or rent? Holiday or a new kitchen? Chinese or Indian takeaway? However, with a little advice, some decisions can be made a lot easier.
That’s why we’ve put together some information on what you can expect from your payroll provider so that you can decide what’s best for you: PAYE or Umbrella.
Whether you’re new to contracting, or you’ve been contracting for as long as you can remember, making the right decision for your payment is important. So, what are the differences between using an Umbrella Company and getting paid by the Agency?
Continuity of Employment
With Agency PAYE, each new contract will be a separate run of employment that will end when your contract with that agency ends. With an Umbrella Company, your employment can continue from contract to contract, meaning that although you may have multiple contracts with different end clients, you’ll only have one employer – the Umbrella Company. This continuity of employment makes life easier when applying for a mortgage or borrowing money.
Whoever your employer is you will need insurance. Good agencies and Umbrella Companies will provide any cover necessary to enable you to perform your work. An Umbrella Company may also provide additional cover like health insurance, life cover, and accident cover at no additional cost.
With both an Umbrella Company and an agency, you are employed and therefore paid through PAYE – yay, no tax returns! However, with an Umbrella Company, you may be able to claim tax relief on some work-related expenses. Good Umbrella Companies will discuss this with you when you enquire to see if you are eligible. If you are, this will reduce the amount of tax you may pay.
As an Umbrella Company is your employer, they should convey to you your statutory employment rights. This includes sick pay, maternity and paternity pay and depending on the company, you could also have access to medical health plans and the Childcare Voucher Scheme, saving you up to £2,392* a year.
As with all employers, there should be support for employees if they have a grievance or need some support. The quality of this support will vary as some employers will be bigger and more experienced than others. Reassure yourself that the choice you make is the one you can most depend on when things don’t run smoothly. Agencies are paid by the end client and could be conflicted in the advice and support they give. Umbrella Companies receive their income from you, and so are more easily able to act in your best interests; in those difficult times, you’ll be thankful of the enhanced HR Support Umbrella Companies often provide.
So while you’re still pondering over the choice of takeaway, hopefully, you’ll be able to make a quicker, more informed decision on whether to go Agency PAYE or Umbrella.