Why use an Umbrella company or as we like to call ourselves, an Outsourced payroll Provider, compared to PAYE through your agency?
We have seen a large increase in education agencies utilising umbrella services since the pandemic and below our National Account Director Paul Johnston explains why:
Since the demise of expenses back in 2016, the thought of utilising a payroll provider for Umbrella services has seen a change in mind-set and not all for the right reasons. Many workers feel that due to not being able to claim expenses, it leaves them no reason to look at a provider and the benefits that they can bring. However utilising a provider actually helps increase on the NET income for workers especially if they are working through more than just the one agency.
By opting to go through the agency as PAYE, you are saying that you are going to work a full 5 day week and 39 weeks in the year through that one agency. Now an agency is going to love the thought of you doing this, however the reality is that this is not always the case. Should you not get a full week or a full term and need to look elsewhere then going PAYE with each agency is going to have adverse effects on your tax. You will end up paying Basic Rate tax for each new employer as opposed to receiving your tax code allowance. With 20% being taken each time from the second/third/fourth agency this has serious repercussions on your Net pay. Put all these agencies through the one payroll provider and you can benefit from the overarching agreement that allows your tax code to be spread across them all, allowing a better return on pay from your Gross.
Things to bear in mind are the costs and deductions that you see. When being paid through a provider your salary will be “uplifted” to take into consideration the Employers NI, Employers Pension, Holiday Pay and Apprenticeship Levy, all these through PAYE would have been dealt with by the agency at a cost to them. By putting workers through a provider those costs are moved to the worker, but as previously mentioned the agency “uplift” your rate of pay to compensate this so in real terms they are covering these costs for you. This also applies to the margin that is charged each week by the Umbrella provider. You will see this appear on your payslip, however, this is also covered in the “uplifted” rate of pay. The long and the short of it is the worker is actually better off with the NET pay through a provider than going PAYE through the agency.
So why have the option of PAYE? Well from a legal and compliance perspective, you must be offered alternative solutions on how you are paid. The easy option is to go PAYE as it is likely the one that is understood more than an Umbrella service, the problem is each worker has a different criteria and assignment so not always the same outcome.
Can you honestly say that over a full year you will not potentially work through more than one agency or can you say that you are not interested in taking home a better NET pay? Then the best financial option would be to go via a provider and who better to use than ePayMe.
As a fully compliant, multi solution outsource payroll provider, ePayMe appears on the preferred supplier list for hundreds of agencies throughout the UK. We are also one of the only outsourced payroll providers to hold a Chartered Institute of Payroll Professionals accreditation and the industry wide Professional Passport stamp of approval. CIPP (PAS) is the only voluntary accreditation on the market to be developed in partnership with HMRC, so you know you are in safe hands when it comes to Customer Service and Payroll Compliance.
Why not give us a call and see what we can do for you when it comes to your workforce 01252 863 700
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