'Umbrella' company - higher take home pay...?

randomfandom

I've been offered a job for a few months through a recruitment agency and they've given me two options for getting paid:

1. The standard method of being on the agency payroll, for which my hourly rate would be £11.17p/h + £1.70 to go into a 'pot' for holiday

or

2. via an umbrella company for which I'd receive a flat hourly rate of £14.18p/h

I've only ever got paid through an agency payroll before, so not had any experience of using umbrella companies, although I've done some research so I do have a basic understanding of what they are.

So, my question is: would my net weekly income be higher, lower or about the same if I use an umbrella company?

marliepanda

When I was paid through an Umbrella Company (mykeypay) I had to pay a fee to them to be paid through them.


I also never quite understood the NI aspect, on my payslip it showed me as paying both employers and employees NI, but then there was a small amount of money paid in by the agency which I think covered the employers NI but was usually a few £ short.


I always found it simpler to be paid through the agency, personally.

randomfandom

Yes, you do have to pay a fee to the umbrella company for their service. My understanding is it's usually around £28 per week.

Do you know if you ended up with more take home pay than if you'd been getting paid via the agency?

marliepanda

randomfandom wrote: »

Yes, you do have to pay a fee to the umbrella company for their service. My understanding is it's usually around £28 per week.

Do you know if you ended up with more take home pay than if you'd been getting paid via the agency?

I was never given the option to choose unfortunately.

bugslet

What's the advantage to the agency of paying you through an umbrella company? Do you get sick pay, holiday pay and enrolled into a pension with an umbrella company?

randomfandom

bugslet wrote: »

What's the advantage to the agency of paying you through an umbrella company? Do you get sick pay, holiday pay and enrolled into a pension with an umbrella company?

There is holiday entitlement and statutory sick pay, which are the same as working with an agency.

coffeehound

bugslet wrote: »

What's the advantage to the agency of paying you through an umbrella company? Do you get sick pay, holiday pay and enrolled into a pension with an umbrella company?

Yes, they enrol you in the NEST scheme, well in my case anyway.

randomfandom

coffeehound wrote: »

Yes, they enrol you in the NEST scheme, well in my case anyway.

So is/was your take home pay higher using an umbrella company than being paid a lower rate PAYE via the agency?

paddyrg

The difference will be marginal - an umbrella company is basically outsourcing payroll. You may be able to claim the odd expense against tax, but the take-home will be marginal once payroll is your cost, boot the agency's.

On those figures, I'd take the agency payroll. Umbrellas are really only meant for true contracting when I'd expect to see a rate closer to £20+/hr.

coffeehound

So is/was your take home pay higher using an umbrella company than being paid a lower rate PAYE via the agency?

I'm not sure to be honest. Just put my hourly rate and hours into an online PAYE calculator and it actually comes out a little higher as PAYE than what I receive from the umbrella co. I pay them £25 a week but even including that, it's still higher as PAYE. However I don't claim any expenses.

In your case, since the hourly rate is higher for Umbrella/ Ltd co, it might well work out better as umbrella, particularly if you are able to claim back some expenses. Hopefully one of the more knowledgeable people here can advise.

Edit -- yes pretty much agrees with the above post!

randomfandom

coffeehound wrote: »

I'm not sure to be honest. Just put my hourly rate and hours into an online PAYE calculator and it actually comes out a little higher as PAYE than what I receive from the umbrella co. I pay them £25 a week but even including that, it's still higher as PAYE. However I don't claim any expenses.

In your case, since the hourly rate is higher for Umbrella/ Ltd co, it might well work out better as umbrella, particularly if you are able to claim back some expenses. Hopefully one of the more knowledgeable people here can advise.

Edit -- yes pretty much agrees with the above post!

I don't think I'll claim any expenses so I'm not expect that to increase my take home pay.

Something I read somewhere was that if you use an umbrella, you can't then claim a tax rebate if you've overpaid at the end of the year.

Does anyone know if that's true?