With April 2020 looming, many contractors are finding that they have to find an alternative pay method for receiving their remuneration. Most agencies are instructing contractors to use an umbrella company to be able receive payments from the agency, otherwise they will need to go PAYE.

The changes in IR35 legislation are being felt right across the private sector.  This change is affecting nurses in the private sector, lorry drivers as well as financial and tech sectors to name but a few.  Many agencies are applying blanket decisions that place all contractors inside of IR35.  Inevitable and inescapable, many of these contractors are now weighing up the decision on whether to go full time PAYE or stay contracting.

With most of the contractors affected having previously been paid via their Ltd company setup (PSC), this change is fairly significant.  Using the rules set out for running a PSC contractors have had the ability to significantly increase their take-home pay.  This is the reason why HMRC has expanded the catchment criteria for IR35.

It’s Your Choice

Facing the choice of full time employment or continued contracting, many contractors are asking what is best for them, umbrella or PAYE?  Both have their own benefits and both have their own shortfalls.  The benefits of each are usually to the decrement of the other.  The decision will usually fall to what suits the working life that you so desire.  The biggest decision is do you want flexibility or stability?

The best parts of Employed PAYE:

  • Continuity of employment
  • No specified end date
  • Holiday pay
  • NIERS paid by employer
  • No fees

The best parts of Umbrella PAYE

  • Increased and negotiable hourly rate
  • Continuity of employment
  • Job flexibility
  • Work for multiple agencies
  • Holiday pay
  • Included insurance
  • Ability to claim expenses

Continuity of Employment

When working with an agency, every contract ends once it reaches a specific date or once you leave the agency.  When you work with an umbrella company and this happens your continuity of employment continues between contracts and even between agencies.  This helps with those situations in life when a continued run of employment can be a deciding factor.  Mortgages, loans and many types of applications.

Job Flexibility

The biggest benefit of working with an umbrella company is the flexibility it will give you as a contractor.  You will be able to work with more than one agency yet still be payrolled by the same umbrella.  You will also be able to choose when you work and where you work.

Employment Benefits

Just like with employed PAYE, umbrella PAYE give you the same same statutory employment rights.  This means you are entitled to sick pay, maternity and paternity pay and a pension.  Payments Pro also offer everyone that works with us access to Staff Treats which gives you an average saving of up to £808 per year through exclusive savings and discounts and freebies.

Support and Advice

As your umbrella company is a neutral party, they should always be on hand to give payroll support without bias.  An umbrella company should always act in your best interests and put you at the forefront. Payments Pro always endeavors to make this our priority!

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