Advice sought on PAYE or Limited (or Umbrella, or Composite...)

[Slackboy]

Hello Everyone,

I'm a first timer to both this site and to employment in general, as I've been in university for a long time. So let me apologise first if I'm asking anything that's been asked a million times before. I have checked around the site already but am still a bit confused.

I think what I'll do is provide as many details as I can to try to be helpful in my request. I don't know anyone else that I can ask about this who would be impartial.

I've just agreed to starting work at a certain nuclear power plant in Cumbria. This was done through the Rullion agency at first and they have passed me over to Capita. I can either get paid via PAYE or one of the other methods above.

The PAYE rate is £10.43 (at 37 hours per week) and according to this site:

Link.

That will get me a take home pay of £295.49 per week or £15,363 per year.

Both of the above agencies have recommended different limited companies as an alternative. Rullion recommended Brookson or Paystream; Capita recommended Orange&Gold or Paystream. I've phoned each of them and here's the take home pay breakdown from each:

Brookson: £363.51 per week (£17,084 for 47 weeks).

Orange&Gold: £326.85 per week (£15,361 for 47 weeks).

Paystream (inside IR35): £333.92 per week (£15,694 for 47 weeks).
Paystream (outside IR35): £386.94 per week (£18,186 for 47 weeks).

The differences seem to be potentially large (apart from Orange&Gold's which almost make it not worth thinking about), but the whole Ltd/Umbrella/Composite thing just seems like a dodgy tax avoidance thing to me. I could imagine if the rules change then the benefits would disappear quickly, only to be replaced by me having to fill out lots of tax forms.

I should also add that I have not seen my contract yet as Capita want me to sort this business out before they'll get things finalised. Also, the lady at Capita that I spoke to said that she'd recommend I went with PAYE if I'm within IR35, which as far as I can see I am.

So should I just go PAYE and save myself some potential hassle, or would I be a schmuck to not go Ltd?


Edit: The Brookson weekly pay needed correcting.

Edit2: I should have mentioned that the Limited rate is £12.72 per hour, and the Ltd companies somehow used that rate to calculate the above numbers.

[Mordac]

>The PAYE rate is £10.43


They'd have to pay me that a second to get me to work for Crapita. And at Windscale (for the old-timers )

I wouldn't recommend you get mixed up with composites, so as far as I can see that leaves O&G on your list. There's also ContractorUmbrella (advert somewhere on this site) and Parasol (suffering major systems probs currently so maybe not on this occasion). At least with a brolly you can claim travelling and some other expenses (although make sure you get receipts - the brolly doesn't care but Hector will). Forget PAYE, unless you think you can claim holiday & sick pay etc. The rules have changed recently.

[MrsGoof]

I think Mordac has said it all but just an minor overvation re the 47 weeks

this assumes you'll have 3 weeks off in the year plus the 2 weeks of bank holidays (don;t forget these poor days). I normally calculate my income baaased around a 45 week year (assuming I can get a gig).

Good luck, please post back when you are sorted as I'm sure what you decide will help someone else

MG

[Slackboy]

Many, many thanks for your help guys.

Thing is, it sounds to me like it's just not worth going for Ltd. If I calculate based on a 45 week year then I'll get much less for Ltd than for PAYE (and also I've been promised paid holidays and sick leave with PAYE by Capita) since that covers 52 weeks. (I haven't done the calculations yet but that sounds about right to me).

In fact it almost looks like the decision is a very easy one to make, and I should definitely go PAYE. Does everyone else agree with that or am I missing some important detail here?

As for Capita I know it's not doing too well at the moment. They seemed to have got the contract through government corruption and some local newspapers have been reporting about how they've missed payments to some people, and aren't going to pay certain bonuses that were promised to existing workers. Hopefully once I've got some pocket money together I can think about moving on to better things, but the experience can't hurt too much can it? (Please don't answer that one!)

Edit: Just realised I haven't asked an obvious question that I should have asked before (although I should probably just ask the Capita lady instead): If I go with PAYE from the start can I switch to Ltd later on?