Understanding PAYE and umbrella company differences
When you register with us for any kind of long-term or supply work, you’ll need to choose whether you’re paid through Pay As You Earn (PAYE) or an Umbrella company.
It might seem confusing, but actually it’s pretty simple – and here’s a quick summary of your options.
Your choices
Which one is best for me?
It’s up to you which option suits you best, but below are some pros and cons of each choice to help guide you:
PAYE
With PAYE, you are essentially an employee of ours. Our payroll department handles your taxation and NI contributions, as well as providing you with a payslip.
And if you ever have questions regarding your work or pay, this is handled under one roof – which makes things very simple for you. Set up is easy too, and there’s no fee for arranging any of this.
Pros
- Athona will be your single point of contact
- No additional fees
- Tax & NI submissions to HMRC dealt with by Athona Education
- Work based pension options
- Payslips are provided
Cons
- Not entitled to claim business expenses
- You will pay basic rate tax on a second employer i.e. if you are working through multiple agencies
Umbrella Company
Umbrella companies’ act as the employer for staff hired by agencies – and this comes with some potential upsides and downsides.
Concerned about selecting an umbrella company that’s using a tax avoidance scheme? The government have released this guide to ensure you don’t get caught out.
Pros
- Your tax and NI will be organised for you
- No personal responsibility for accounting
- Full employment rights, including holiday allowances
- Payslips are provided by the umbrella company
- You can work through multiple agencies under one tax umbrella
Cons
- Inflexible pay date – this will depend on the umbrella company’s own policy
- Admin fees apply for their services
- You are responsible for the employer’s NI contribution as well as the employee’s.
FAQ
If you have a P45 from a previous employer, please email this into your consultant and we can update the tax code from that. If you do not have a P45 we can complete a starter declaration form with you or you can complete it online here.
This will enable us to submit your details to HMRC so they can sent us the correct tax code to use. If you are set up with an umbrella company, you will need to send these documents directly to them.
If you are paid PAYE, you will receive your payslip from us each week on either a Wednesday or Friday depending on when we have processed your timesheet. If you are paid via an umbrella company, the umbrella company will send you a payslip. Please retain these for future use, however if you require further copies, please let your consultant know and we can arrange for these to be emailed to you.
Claims are calculated on a case by case basis depending on a number of factors. If you are PAYE, please contact the payroll team for more information on how to make a claim. If you are paid via an umbrella company, you will need to discuss any claims directly with them.
Please send your new bank details to your consultant so they can forward them on to the payroll team. Any bank details received before 5pm each Friday will be updated for any payments received the following week.
When there are changes to timesheet deadlines due to a bank holiday, we will communicate these to you directly. We give plenty of notice to make this a smooth and easy process to ensure you get paid on time.
If you are paid via an umbrella company, you will need to contact them for their specific deadlines/pay dates.
Get in touch today
To find out more or to discuss any of these options further, get in contact with your recruitment consultant today by calling 01277 245840