Most recruitment agencies have a PAYE payroll service to their temporary workers. In doing so there are certain costs associated with this, including Employers NI as the agency is classed as the workers employer. However, if a worker becomes a limited company contractor, whether through an umbrella company or via their own company, agency is no longer required to pay Employers NI. This cost saving can then be used to uplift the worker’s pay rate. When uplifting a rate you should apply the following logic: Basic pay + Holiday pay + Employers NI.
If you have a contractor on a basic pay of £200 per day, with the addition of holiday pay at 12.07% and employers NI at 13.8% the cost to the agency is £250.98 (the cost to the agency if paid PAYE). However, if you pay the contractor £230 per day through PayStream you have just increased your margin by £20.98 per day. The contractor will likely take home more money as the expenses the contractor claims not only offsets tax but also the employees and employers NIC. Your CRM at PayStream will be able to help you calculate uplifts in individual cases to get the desired result.