Employers NI + Pension - Paye vs Umbrella

[relax24]

I should preface this with the fact I know I'm going to get face palmed

Typical occurrence, my client has said no PSC contractors. Either use the agency PAYE or use one of our approved umbrellas (sorry northernlad, contractor Umbrella isn't one of them)

Breakdown:

Paye: £475 a day. The client will contribute the employers NI and a 3% workplace pension on top of my 475 a day. They deduct holiday pay and will return it to me at the end of my contract if I haven't used it.

Umbrella: £527.85 a day. "This covers your current rate + 3% pension + Employers NI + Apprenticeship Levy, the latter 2 amounts will be deducted out of the gross rate paid"

I'm in 2 minds here. Part of me is thinking well it's only short term and you're going permy in 3 months. Part of me is saying use the umbrella and do a salary sacrifice.

The umbrellas are Nasa, brookson, paystream, parasol which all are charging ~£20 a week. The umbrella has a rougly 11% uplift in day rate.

[SimonMac]

Unrelated question, was £475 your day rate before the changes came in? If so either Brolly or PAYE you are doing better than most

[eek]

I should preface this with the fact I know I'm going to get face palmed

Typical occurrence, my client has said no PSC contractors. Either use the agency PAYE or use one of our approved umbrellas (sorry northernlad, contractor Umbrella isn't one of them)

Breakdown:

Paye: £475 a day. The client will contribute the employers NI and a 3% workplace pension on top of my 475 a day. They deduct holiday pay and will return it to me at the end of my contract if I haven't used it.

Umbrella: £527.85 a day. "This covers your current rate + 3% pension + Employers NI + Apprenticeship Levy, the latter 2 amounts will be deducted out of the gross rate paid"

I'm in 2 minds here. Part of me is thinking well it's only short term and you're going permy in 3 months. Part of me is saying use the umbrella and do a salary sacrifice.

The umbrellas are Nasa, brookson, paystream, parasol which all are charging ~£20 a week. The umbrella has a rougly 11% uplift in day rate.

PAYE - £52.85 doesn't to me look like enough to cover the employer NI...

[SimonMac]

Fag packet maths, brolly comes out about £30 a week better off

[eek]

Fag packet maths, brolly comes out about £30 a week better off

How when Clarity's calculator tells me that Employer NI alone is £59.10 a day or £6 more than the increase for going with the umbrella.

In reality there is probably little in it but I think PAYE is better unless you wish to salary sacrifice a lot into a pension...

Plus because the agency is paying you directly, you won't be appearing on the agency report which would make HMRC's catching you slightly more difficult.

[relax24]

Unrelated question, was £475 your day rate before the changes came in? If so either Brolly or PAYE you are doing better than most

It's 450 currently outside IR35, and the contract is coming up so have to switch to inside straight away...Naturally I asked for a £50 day increase. Got £25. Tbf, it's still a little lower than the going rate for financial services company.

PAYE - £52.85 doesn't to me look like enough to cover the employer NI...

Fag packet maths, brolly comes out about £30 a week better off

hmmm...2 conflicting answers

[relax24]

How when Clarity's calculator tells me that Employer NI alone is £59.10 a day.

There is probably little in it but I think PAYE is better unless you wish to sacrifice a lot into a pension...

Nasa allows salary sacrifice into any provider of your choice for £5 a week. I was thinking 15% straight into my SIPP

[eek]

Nasa allows salary sacrifice into any provider of your choice for £5 a week. I was thinking 15% straight into my SIPP

Have you asked the agency if they could pay more into a pension directly - if you don't ask you will never get and they might be happy to do so...

[relax24]

Have you asked the agency if they could pay more into a pension directly - if you don't ask you will never get and they might be happy to do so...

I did, they say no. And the 3% is only on qualifying earnings, which isn't that much when compared to salary sacrifice

[northernladuk]

So what is the question here? You want us to go find which method will be better for you, go get the exact figures you'll be paid by the different methods or do you want us to make the decision which one to go with for you?

Or is there something else you want us to do for you instead of you understanding how you get paid and making your own decision?

At least you did give us the heads up a while ago..

Thanks so much for the quick reply! I am a complete and utter muppet when it comes to anything tax/finance related, now i'm stressing about "what if the accountant does stuff incorrectly or doesn't submit returns"

I already miss the permy life. I suppose that'll change once I get paid.

At least now you are half way back to permie life so should be getting easier for you no?