Umbrella Vs PAYE

[Lana Banana]

Hi All,

I'm looking for advice, and trying to work out whats the best deal for me, I've been offered a role with the option of being paid £44k as a employee, PAYE, pension, 23 days holiday, 4 days a week, or being paid £250 a day by a umbrella or limited company, is there a calculator anywhere that can detail the benefits for me. Travel will be just be home to office, so no business mileage.

Any help would be appreciated.

Thanks

Valerie

[northernladyuk]

Hi All,

I'm looking for advice, and trying to work out whats the best deal for me, I've been offered a role with the option of being paid £44k as a employee, PAYE, pension, 23 days holiday, 4 days a week, or being paid £250 a day by a umbrella or limited company, is there a calculator anywhere that can detail the benefits for me. Travel will be just be home to office, so no business mileage.

Any help would be appreciated.

Thanks

Valerie

Look at contractor calculator.

However, if the role is Inside IR35 (and I'm guessing it is), go as an employee 100% certain.

If it is outside IR35, then you almost certainly want to go as an employee, but there may be a marginal case for Ltd (but I doubt it would stack up).

[northernladuk]

Surely it can't be outside IR35 the options are umbrella or employee.. Or were you just making a comparison if the situation was different.

Without knowing anything about you I'd be picking employee there. BUT.. Are you really an employee or is it a Fixed Term Contract (FTC)

[TheFaQQer]

If it is outside IR35, then you almost certainly want to go as an employee

[northernladyuk]

Sorry, a quick response on my part wasn't properly explained.

If the role is Inside IR35 (and I reckon it is), it is cut and dried to take it as an employee from an economic perspective.

If the role is defensible as outside IR35 (which I doubt), then from an economic perspective I would still probably take it as PAYE, if offered, but it could feasibly stack up in favour of contracting via Ltd. I know there is a purist view that an outside IR35 role can't be employed, but pragmatically speaking, there are an awful lot of people working outside IR35 on projects alongside employees doing very similar work, and arrangements can be put in place to put some project based roles outside IR35.

[TheFaQQer]

I'm looking for advice, and trying to work out whats the best deal for me, I've been offered a role with the option of being paid £44k as a employee, PAYE, pension, 23 days holiday, 4 days a week, or being paid £250 a day by a umbrella or limited company, is there a calculator anywhere that can detail the benefits for me. Travel will be just be home to office, so no business mileage.

You can find a PAYE calculator online easily - I like https://listentotaxman.com/

For umbrella calculations, have a look at Contractor Umbrella and use their calculator - Umbrella Company PAYE Calculator | Contractor Umbrella

If you want to put money into a pension plan via salary sacrifice, then you are best off doing that as an employee of the client rather than any umbrella.

Assuming that the 4 day week also applies if you are working through an umbrella, I'm not sure that there is any benefit in using one. 52 weeks a year, 4 days a week gives you 208 days if you don't take anything else off. At £250 a day, that's an absolute maximum of £52k. If you take 23 days holiday, you're at a maximum £46250 (assuming that all the bank holidays are days that you usually don't work), so the difference between £44k PAYE and £46250 umbrella wouldn't be worth it from my perspective (pension cost, sick pay etc not even factored in)

[malvolio]

It's not about money, it's about security. Even on an FTC, an employee has far more protections and benefits that any contractor. If they are offering both for the same role, take the permie one every time; the alternative is saving them (and certainly not you) a lot of money, risk and legal responsibilities.

[northernladyuk]

You can find a PAYE calculator online easily - I like https://listentotaxman.com/

For umbrella calculations, have a look at Contractor Umbrella and use their calculator - Umbrella Company PAYE Calculator | Contractor Umbrella

If you want to put money into a pension plan via salary sacrifice, then you are best off doing that as an employee of the client rather than any umbrella.

Assuming that the 4 day week also applies if you are working through an umbrella, I'm not sure that there is any benefit in using one. 52 weeks a year, 4 days a week gives you 208 days if you don't take anything else off. At £250 a day, that's an absolute maximum of £52k. If you take 23 days holiday, you're at a maximum £46250 (assuming that all the bank holidays are days that you usually don't work), so the difference between £44k PAYE and £46250 umbrella wouldn't be worth it from my perspective (pension cost, sick pay etc not even factored in)

Have you included Employers' NIC?

[uk contractor]

As others have said this is probably disguised perm therefore inside IR35 so take the £44K perm offer otherwise you risk being exposed to an IR35 investigation. If you went the ltd company route then most likely at some time you would get investigated. Umbrella would negate that but its around 30% less take home due to NI & Tax x 2 (both employee & employer contributions).

[TheFaQQer]

Have you included Employers' NIC?

No - I was only looking at the gross headline figure before any tax or NI was deducted.

Perm is a no-brainer.