PAYE, Ltd or Umbrella for contract role?

SteProud

I work for an umbrella company and a contractor accountant so I am not impartial but if you go to www.contractorcalculator.co.uk or www.contracteye.co.uk they have some really useful independent guides to all of your options. You are getting good advice of Kiki though IMO.

Don't forget that if you go down the umbrella route you will be responsible for both employer and employee NI.

Our best advice team usually recomend that if you aren't into contracting as a career and see it as stop gap, and the rate equates to less than about £30K a year then its not really worth going down the limited company route.

LittleVoice

snuggywumple wrote: »

I have no idea if the PAYE would be through the agency or from the employer directly?

I guess it is much easier if I just mention the numbers (I wish it was £350 day rate)!

£250 PAYE, £270 with holiday
£300 umbrella / ltd.

does that make it clearer?

As for whether it would be a one off contract and then back to perm, I really have no idea!

If those are being quoted as real rates to you then they are under-paying for holiday. Statutory minimum holiday equates to 12.07% of worked hours/pay. So £250 should have 12.07% added - thus reach £280.18.

agrinnall

I would say it's quite unusual for PAYE to be offered in a situation like this, given that it'll be a £60K+ salary. The differential between PAYE and Ltd/Umbrella is quite small, and if you are in IR35 then the employers NI and other costs is likely to make choosing PAYE a good option. Outside IR35 then it's weighted more towards Ltd/Umbrella but still not a no brainer for such a small gain.

KiKi

agrinnall wrote: »

I would say it's quite unusual for PAYE to be offered in a situation like this, given that it'll be a £60K+ salary. The differential between PAYE and Ltd/Umbrella is quite small, and if you are in IR35 then the employers NI and other costs is likely to make choosing PAYE a good option. Outside IR35 then it's weighted more towards Ltd/Umbrella but still not a no brainer for such a small gain.

But it's PAYE with the agency - ie, just agency work with a day rate. Not PAYE with an employer; in my experience of contracting that's not uncommon.

But I agree, small difference for a short contract.

KiKi

Notmyrealname

KiKi wrote: »

AFAIK, whether she's PAYE with the agency or Umbrella, she's not directly employed by the company and they can dispense with her at any time.

KiKi

That is correct. However as PAYE the agency have to pay her on time. With Umbrella/Ltd there is no legal right to be paid on time or they can just decide not to pay at all and then you're chasing through the county court to get your money at your own expense whereas on PAYE you have a tribunal as recourse.