PAYE vs Umbrella - Projections

[haverer]

Morning All.

For the past year I have been under IR35 via an Umbrella Company. I have the option of a new contract in the New Year (same current rate of daily pay) and after speaking with the Agency earlier this week they have said I can either stick with 'IR35 via an Umbrella' or the other option is to go 'PAYE through the Agency'.

If I go PAYE they have said it will be a lower rate (£115 per day lower) than if I go via an Umbrella as "the client pays for holiday pay and employers NI".

I have asked for an income projection for PAYE so I can make my decision but their response was "they do not have a calculator to work out my take home and that it may be worthwhile checking with an accountant or an online calculator".

At the moment it's difficult for me to make a decision as I have no idea what the difference in "take home" would be going down the PAYE route. Can anyone please point me in the direction of an online calculator I could use or someone I could speak to?

Many thanks in advance and apologies if this question has already been asked before.

[Amanensia]

Loads of calculators around - here's a random example.

If the rate reduction allows accurately for the difference in ERNI and holiday pay it'll probably be a wash. The only significant reason I could think of in that case to stay Umbrella would be if:
- you want to make significant pension contributions, AND
- the Umbrella allows this via salary sacrifice, AND
- the Agency PAYE route does not offer the salary sacrifice

If this doesn't apply and the calcs are virtually the same, I'd probably go agency PAYE.

[DolanContractorGroup]

Loads of calculators around - here's a random example.

If the rate reduction allows accurately for the difference in ERNI and holiday pay it'll probably be a wash. The only significant reason I could think of in that case to stay Umbrella would be if:
- you want to make significant pension contributions, AND
- the Umbrella allows this via salary sacrifice, AND
- the Agency PAYE route does not offer the salary sacrifice

If this doesn't apply and the calcs are virtually the same, I'd probably go agency PAYE.

Hi,

Although everything said here is correct, I would still say that umbrella PAYE has other benefits over Agency PAYE.

There is a good chance that the umbrella rate is more than the agency PAYE rate, most uplift it by more than just the employment costs and umbrella margin.

Secondly, there is still continuity of employment (helpful for things like mortgages) and the ability to claim mileage through the umbrella (under AMAPS) if going to temporary sites. Can't do this under agency PAYE.


Thanks

Zeeshan

[haverer]

Thank you both for your replies, certainly a few things for me to think about.

At the moment I only pay in around £300 per week into my pension so not a huge amount so I will definitely ask about this. With my current Umbrella Company they won't let me claim back expenses of any kind including mileage so that part won't affect me going forward.

I am swinging towards agency PAYE but if they were a bit more helpful and produced some (possible) projections then this would have helped immensely.