Agency Payroll or Umbrella Company (Feature)

[UKFF Mod]

When you land an assignment as a contractor through a recruitment agency, you'll frequently be offered two separate pay rates for the job: one rate to work as an agency PAYE employee, and another rate to work through an umbrella company or your own limited company (LTD).

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If you have any comments to make about this article feel free to start the debate below!

[CliveP]

My average uplift is usually £3.50 per hour, give or take the odd 50p. I've had agencies claim ignorance when I ask for a higher rate for working through my own limited company. Most are fairly reasonable though and seem to grasp the concept once they've been in the market for a while.

Clive

[Pistachio]

To be frank, I think you'd be crazy to go agency PAYE unless you're a very lowly paid office temp. I understand (contrary to other viewpoints on here) why first timers might use an umbrella company if they're not sure how long they'll be doing the whole contracting thing, and there are definitely benefits....

....if you stay complaint.

Why sacrifice a couple of the benefits you could get by just going PAYE with the agency?

[Malvolio]

Compliant with what, may I ask...?

[Pistachio]

Well, aside from the fact I wrote complaint instead of compliant....

I meant that as long as you only claimed legitimate expenses and always kept receipts to get the few benefits of working under an umbrella.

[Vaseline]

Why would anyone want to work through an umbrella company when they can run their own limited company and take home a shed load more money?!?

[Malvolio]

Originally Posted by Vaseline

Why would anyone want to work through an umbrella company when they can run their own limited company and take home a shed load more money?!?

Far too difficult. There's all that paperwork. And you have to make your own decisions.... Well worth 15% of your gross not to have to bother.

To be fair an umbrella is a good solution for people who may not be going freelance long term, but if they are, economically it's a nonsense. That's not why people use them.

[Beefy198]

I still maintain, despite the protests of other contractors/posters that the umbrella solution is right for some people.

If you're only going to be contracting for a short time, or not sure if you'll be doing it for long, why bother? Some people are almost limited company Nazis, piping up with "go ltd!" to anyone that asks for advice on umbrellas without asking them of their individual circumstances.

There are also some people that just don't want the extra hassle. That's completely up to them, whether the rest of us think keeping some receipts and entering them into a spreadsheet a couple of times a month and keeping track of invoices is actually a simple process is not our concern. Just leave them to it.

[Malvolio]

I've never said not to use Umbrellas, they clearly have their place and are the right solution for some.

The ony time I will push the "Go Ltd" line is when a brolly user pops up and complains about the money he's paying out to use one. Far too many people haven't yet twigged that the Umbrella solution is, pound for pound, the most expensive way of getting paid.

[Beefy198]

Originally Posted by Malvolio

Far too many people haven't yet twigged that the Umbrella solution is, pound for pound, the most expensive way of getting paid.

Absolutely, I just know of certain other forums where they say "go limited" to any umbrella company query.