Umbrella or Agency PAYE?

Some agencies will allow you to use their PAYE system rather than working for an umbrella company. Where you have this choice, there are a few things you need to consider to ensure you’re making the right decision.

Employment status

When you work for an umbrella company you are a permanent employee. This gives you access to full employment rights, including sick pay, maternity/paternity pay and holiday pay. This is not always the case with agency PAYE, which is why many contractors choose to go through an umbrella company. If you’re considering using agency PAYE we strongly advise that you ask the agency exactly what status you will be given and whether full employee benefits will be available to you.

Expenses

Depending on the assignment, working for an umbrella company may allow you to claim business expenses for the cost of travel to and from your workplaces, as well as certain other expenses. An umbrella company will be able to establish whether you are eligible to claim from your circumstances and the details of your assignment. It is not possible to claim travel expenses if you work through agency PAYE, so it’s worth considering how much travel your assignment will require and whether an umbrella company could save you money.

Multiple assignments

An umbrella company provides continuous employment from when you join to when you leave, even if you work for many different agencies and clients during that time. This means you could have only one employer and therefore only one tax code, even if you work for more than one agency. It also makes umbrella employment a better option if you decide to work on a more ad-hoc basis with gaps between your assignments.

Specialisation

An umbrella company will be expert in managing your employment and pay as this is their speciality, where an agency may have other priorities. This expertise will often mean an umbrella company is best placed to support and advise you as the contracting industry responds to ever changing legislation.

If you’re thinking of becoming an umbrella employee and would like to see how Orange Genie Umbrella could help you, please call on 01296 468483 or email umbrella@orangegenie.com.

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