Hybrid
What is Hybrid & how will it benefit your contractors?
Hybrid is a pay solution, combining the best of both Umbrella and PAYE.
What does that mean?
Hybrid guarantees a contractor will be better off than being paid via PAYE.
How does this work?
Under PAYE there are 3 types of taxation:
- Personal Tax
- Employee’s National Insurance (paid by the worker)
- Employers National Insurance (paid by the employer)
Hybrid can utilise expenses like a normal Umbrella model to provide a more Tax efficient pay. The expenses that can be off-set will depend on the contractors SDC status, please contact us for further information.
Our systems automatically work out what a contractor would receive under PAYE and apply an ‘uplift’ to guarantee they are better off than on PAYE.
What does this mean for the contractor?
Contractors working through Hybrid will always be better off than on PAYE.
What does it mean for the agency?
This means the agency will increase margins by using Hybrid rather than having contractors on a mixture of PAYE and/or Umbrella. This helps towards any margin at risk through the transparency to which AWR changes created.
It means the agency can offer one payroll type (as no contractor will be worse off than PAYE.
The way in which the calculations are formulated and uplift elements calculated, are by processing the PAYE style payroll, then running the same values and expense offset. The difference required to support the contractor to ensure they are financially better off is calculated and added as an uplift/supplement.
The uplift is a proportion of the ERNI, which results in the agency not paying the difference; this is a bottom line cost saving.
Agencies are not only converting more contractors, but in return they are making significant savings by adopting this solution, whilst helping the contractors potentially take home more net pay.
What to do next?
We have found that agencies have adopted this solution for all new contractor registrations whilst we work jointly in migrating the current working contractors across. The registration process is the same as Umbrella in relation to Contract of Employments and Over Arching Agreements.
Give us a call today on 01252 863 700 to talk to one of our advisor’s regarding the best payroll package to suit your needs.