With over 8 million employees in the UK receiving furlough through the CJRS recruitment agencies are seeking alternative options to umbrella but is PAYE the way forward?
PAYE V’s Umbrella
Many contractors and agencies get confused by umbrella, umbrella is a form of PAYE where the payroll provider deducts the standard PAYE deductions from the contractors earnings and submits these to the government. The agency provides the contractor with an ‘agency rate’ which is an uplifted rate of pay to cover the employment costs which are deducted from the contractor and submitted to the government. The uplift covers these costs, which means the workers take home pay is a PAYE equivalent.
So what is the difference? Umbrella payroll gives the contractor the flexibility to work on a number of assignments across a number of agencies/clients without affecting their tax code. The contractor is under a contract of employment with the payroll provider, which means any statutory payments, pension, and employment enquiries sit with the payroll provider, not the agency.
PAYE is a simple payroll process whereby the contractor will only see the PAYE deductions on the pay advice slip with no employment costs included. Anyone paid through PAYE will be restricted to the work they can complete without affecting their tax code. A worker paid PAYE with an agency that then takes on another assignment with another agency will be placed on a BR tax code automatically. Therefore, the worker is penalised for working more, seem fair? We think not.
How about something else, the best of both worlds?
Our Hybrid scheme…
Hybrid combines the best of both umbrella and PAYE.
Hybrid guarantees a contractor will be better off than being paid PAYE. Our bespoke HMRC payroll system automatically works out what a contractor would receive under PAYE and applies an ‘uplift’ to guarantee the take home pay.
This bespoke option has a proven track record of maintaining your workforce as well as keeping your administration duties low, as contractors under the Hybrid scheme are under a contract of employment with us! Again taking away statutory payments, pension, and employment enquiries.
To discuss any of our products or for more information on what would be best for your workforce contact our team who will be happy to discuss the options with you.
Tel: 01252 863 700 Email: sales@epayme.co.uk