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View Full Version : PAYE or Brolly with 27% uplift - Advice sought



TouchingSkies
29th November 2013, 04:09
Hi All,

(I originally posted this on another sub-board until I realised this board was it's rightful place)

I have been using the search facility and have been able to much information regarding the contract market and how IR35 seeks out employees in a LTD disguise.

I also recognize the employers 13.8% contribution you have to pay if going via umbrella + fees, and to make sure the NI uplift is sufficient to cover this.

However I am still confused (thinking I am missing something)as to whether I am better off or not going PAYE or Umbrella, I have tried comparing calculators,but the brolly one used a different tax codes also:

They are offering for a standard 40 hour week:
PAYE £13
whilst for Umbrella it is £16.58 , which is roughly a 27% increase to allow for employers NI + umbrella fees.

I am on tax code 981L and would definitely fall within IR35 and would not be claiming additional expenses.

Can someone help me out?

Zippy
29th November 2013, 06:49
Sorry, but I'm having difficulty understanding your post. Where do the £13 and £16.58 come from?
AFAIK you have to pay employers NI whether you are PAYE or umbrella, Is the agent offering PAYE and do they charge a fee?
Also - are you sure you won't want to claim any expenses? You don't need books, equipment, stationery or have a business mobile?
Btw - IR35 doesn't apply in either of these situations, so don't worry about that.

TouchingSkies
29th November 2013, 08:06
Sorry, but I'm having difficulty understanding your post. Where do the £13 and £16.58 come from?
AFAIK you have to pay employers NI whether you are PAYE or umbrella, Is the agent offering PAYE and do they charge a fee?
Also - are you sure you won't want to claim any expenses? You don't need books, equipment, stationery or have a business mobile?
Btw - IR35 doesn't apply in either of these situations, so don't worry about that.

Agency PAYE on offer is £13 p/h
Whilst it's £16.58 p/h if I go ltd/umbrella.

Also I will be travelling to and from a single place of work, and thus after reading previous comments from previous posts, don't think I can count mileage nor lunch as an expense

moggy
29th November 2013, 08:46
the uplift usually covers some amount for holiday that you would have had if you were paye. If you have expenses, mileage and so on and they have uplifted 27% then brolly IMO is the better option.

pmeswani
29th November 2013, 09:02
Agency PAYE on offer is £13 p/h
Whilst it's £16.58 p/h if I go ltd/umbrella.

Also I will be travelling to and from a single place of work, and thus after reading previous comments from previous posts, don't think I can count mileage nor lunch as an expense



I would still get your contract and working practices reviewed by the likes of QDOS or another specialist. It may be the case you are not IR35 caught. I travel to and from a single place of work, and I claim subsistence and travel and am not IR35 caught.

LisaContractorUmbrella
29th November 2013, 09:56
This would be the breakdown for 37.5 hours at £16.58 hours through an umbrella company on a 944L tax code - as yours is 981L you have an additional £370.00 per year tax free allowance which equates to £7.11 per week and therefore won't make a significant difference.

Income 621.75
Expenses 0.00



Employer's NI 53.99
Employee's NI 46.95
Employee Tax 71.24
Total All Tax 172.18
CU Margin 27.50
Total Net Income 419.53

The agency PAYE would give you gross earnings of £487.50 with income tax of roughly £60.00 and employee's NI of roughly £40 which would leave you with £387.50.

HTH

TouchingSkies
29th November 2013, 10:16
This would be the breakdown for 37.5 hours at £16.58 hours through an umbrella company on a 944L tax code - as yours is 981L you have an additional £370.00 per year tax free allowance which equates to £7.11 per week and therefore won't make a significant difference.

Income 621.75
Expenses 0.00



Employer's NI 53.99
Employee's NI 46.95
Employee Tax 71.24
Total All Tax 172.18
CU Margin 27.50
Total Net Income 419.53

The agency PAYE would give you gross earnings of £487.50 with income tax of roughly £60.00 and employee's NI of roughly £40 which would leave you with £387.50.

HTH

Thanks Lisa and Pmeswani,

The umbrella route net benefit will obviously run against the paid for holidays offered by the agency paye.

I will also check out QDOS

LisaContractorUmbrella
29th November 2013, 10:24
Thanks Lisa and Pmeswani,

The umbrella route net benefit will obviously run against the paid for holidays offered by the agency paye.

I will also check out QDOS

If the agency is offering you paid holiday, based on the statutory entitlement, at £13 per hour you would definitely be better off going PAYE with them. You mentioned that you are not entitled to claim expenses - do you intend to work on only one contracting assignment?

malvolio
29th November 2013, 11:04
I will also check out QDOS
Why? Neither option will go anywhere near IR35...

TouchingSkies
29th November 2013, 11:11
If the agency is offering you paid holiday, based on the statutory entitlement, at £13 per hour you would definitely be better off going PAYE with them. You mentioned that you are not entitled to claim expenses - do you intend to work on only one contracting assignment?

The agency are offering standard 20 + 8 bank holidays, obviously pro rata.

Yes I currently intend on only working one assignment, and I had spoken to NASA consulting, before I found this website and you Lisa. They were stating I could claim for subsistence (usual £5 per day) and mileage, even though I am only going to one place of work, like a regular employee via an agency, but I have read your comments on other threads and checked the IR website - and your comments Lisa align more closely with IR than NASA's

NASA also offered a statutory holiday pay, with a certain % deducted from your wages, and a rolled up one, whereby it's in the pay packet instead - which didn't really make sense nor did I push because I didn't have the time. I presume all this is standard and it's the customer service and delivery that you really pay for

LisaContractorUmbrella
29th November 2013, 11:44
The agency are offering standard 20 + 8 bank holidays, obviously pro rata.

Yes I currently intend on only working one assignment, and I had spoken to NASA consulting, before I found this website and you Lisa. They were stating I could claim for subsistence (usual £5 per day) and mileage, even though I am only going to one place of work, like a regular employee via an agency, but I have read your comments on other threads and checked the IR website - and your comments Lisa align more closely with IR than NASA's

NASA also offered a statutory holiday pay, with a certain % deducted from your wages, and a rolled up one, whereby it's in the pay packet instead - which didn't really make sense nor did I push because I didn't have the time. I presume all this is standard and it's the customer service and delivery that you really pay for

Glad I've been of help :happy

If you intend to work only on one assignment whilst in the employment of an umbrella company then your workplace will not meet HMRC's definition of a temporary workplace and you therefore won't be entitled to claim travel or subsistence costs. In your case I do think you would be financially better off working PAYE through the agency

TouchingSkies
29th November 2013, 17:35
Glad I've been of help :happy

If you intend to work only on one assignment whilst in the employment of an umbrella company then your workplace will not meet HMRC's definition of a temporary workplace and you therefore won't be entitled to claim travel or subsistence costs. In your case I do think you would be financially better off working PAYE through the agency

Sincere thanks Lisa for your straightforward advice - much appreciated.

Also after digging, I 've realised I've only taken 20 days (2x10) off in two years and previous company paid me for the additional days worked...

ASB
30th November 2013, 14:57
Currently rolled up holiday pay is illegal, as is being paid in lieu (for the statutory 28 day minimum). I dont doubt both these happen of course.

LisaContractorUmbrella
2nd December 2013, 08:05
Sincere thanks Lisa for your straightforward advice - much appreciated.

Also after digging, I 've realised I've only taken 20 days (2x10) off in two years and previous company paid me for the additional days worked...

You're most welcome TouchingSkies :wink