Umbrella companies vs agency PAYE; what is the difference between them? Understanding the difference can be difficult, so we’ve written a short, helpful post that looks at some of the main differences to remember.
Read below to learn more about this, and if you are searching for an umbrella company, then Clockwork Contracting is the number one choice. We provide compliant and transparent services to end clients, agencies and contractors. Get in touch with us today via our website.
What is an Umbrella Company?
An umbrella company is a company that you become an employee of. This means that the agency will pay the umbrella company, who will deduct the necessary PAYE and NI contributions, before paying the contractor their salary.
What is Agency PAYE?
PAYE (Pay As You Earn) is when an agency is the contractor’s employer and is responsible for paying them. The agency must deduct the employed levels of tax and NI contributions are calculated, before the contractor receives their salary.
What are the Main Differences?
First of all, a big difference is that when an umbrella company is overseeing the necessary deductions, they will also be calculating the tax relief on any allowable business expenses, where the contractor isn’t subject to supervision, direction or control. As a result, this could mean that there is an increased take home pay. Contractors working through an umbrella company should submit their timesheets and log their expenses online.
Secondly, another difference is the extra benefits you receive when working with an umbrella company. An umbrella company will give you access to certain statutory benefits such as sick pay. What’s more, they will also employ you under a contract of employment, so whether you carry out one assignment or 100, you will be employed under the same contract. This gives you a record of continuous employment, helping you with mortgage and loan applications.
Furthermore, this will also ensure that you’re on the right tax code, whilst providing you with one pension pot too. There is also the benefit of an inclusive insurance package, which you won’t get if you’re to be paid via agency payroll.
Searching for an Umbrella Company?
Should you be searching for an umbrella company, then Clockwork Contracting is the best choice. We are a trusted payroll provider and umbrella company with an excellent reputation and customer service. We provide a number of services including PAYE Umbrella, Self-Employed, Professional Employment Organisation (PEO) and Outsourced Payroll.
If you would like to get in touch with us at Clockwork Contracting, then please give us a call on 02030 042262. We’re here to answer your questions, provide you with more details about our services, and discuss your requirements in more depth.
You can also message us via the online form on our website or email us at email@example.com and we’ll get back to you as quickly as possible. In the meantime, head over to the Clockwork Contracting website today for more information.