What's the difference between PAYE and an umbrella?
Our Accounts Assistant, Morgan, explains the difference between PAYE and umbrella in just 30 seconds.
- One of the differences, as mentioned above is that the umbrella company will make the necessary deductions and also calculate any tax relief on allowable expenses, where the contractor isn't subject to supervision, direction or control, this can result in an increase in take home pay.
- Very little admin to do and the contractor simply submits their timesheets and logs expenses online.
- The contractor will enjoy a continuous employment record which is handy for mortgage and loan applications.
- Access to statutory benefits and inclusive insurances, this means the contractor can do what they do best knowing they are covered.
- A good umbrella company, like My Max, will give contractors access to a free employee rewards scheme and other benefits like in-house financial advisors.
- The agency is the contractors employer and therefore is responsible for paying the contractor.
- Employed levels of tax and NI is calculated and paid.
- The contractor submits their timesheets to the agency.
- The contractor has access to certain statutory benefits, like statutory sick pay.
- Tax relief on any expenses is not available.
