PAYE Rate and Umbrella Rate - New to contracting - Need some clarity

[srkamath]

Hi,
I am new to the contracting world and have just received an offer where the Agency has given me a rate of £683 / day umbrella rate. However , he has given me an Agency PAYE rate of £592 (with holiday accrual) and a rate of £517 (without holiday accrual). I am told further statutory deductions will be carried out on these PAYE rates. My question is why is the agency offering a lesser rate as PAYE rate when both umbrella and Agency are carrying out the same statutory deductions (NI+Income Tax) and holiday pay. I am bit confused to understand this and wanted to find out if this is a common market practice. If so, what is different about Agency PAYE that they are offering a lesser rate. I am guessing the end client is paying the full rate of £683 in both cases. I am not sure if there is something I am missing and sorry if i sound a bit dim.

[northernladuk]

You've posted it in completely the wrong part of the forum. It could be argued it's accounting rather than business/contracts but there is actually an Umbrella section in the Accounting/Legal where it should have gone.

Been asked plenty of times. You can find all the threads discussing this in the search link below.
https://www.google.com/search?q=agen...ntractoruk.com

Play around with the keywords to find more.

When you've dug through that and are going umbrella make sure you go with Clarity Umbrella who are FCSA. If the agent says no then insist they add Clarity to their PSL. It's usually based on FCSA lists so shouldn't be too arduous.

[eek]

You've posted it in completely the wrong part of the forum. It could be argued it's accounting rather than business/contracts but there is actually an Umbrella section in the Accounting/Legal where it should have gone.

Been asked plenty of times. You can find all the threads discussing this in the search link below.
https://www.google.com/search?q=agen...ntractoruk.com

Play around with the keywords to find more.

When you've dug through that and are going umbrella make sure you go with Clarity Umbrella who are FCSA. If the agent says no then insist they add Clarity to their PSL. It's usually based on FCSA lists so shouldn't be too arduous.

Agencies will have Approved (ASL) and Preferred (PSL) lists. The latter will be harder to get on to.

[Paralytic]

Agencies will have Approved (ASL) and Preferred (PSL) lists. The latter will pay a commission to the agency

FTFY.

(only partially joking)

[eek]

FTFY.

(only partially joking)

I was actually going to say that but I know of agencies with a PSL who don't receive kickbacks.

[uk contractor]

Home - Clarity Umbrella Ltd - UK PAYE Umbrella Company
Lucy is all you need she is wonderful & offers a fantastic no hassle service!

[northernladuk]

<modsnip>

Lucy has been on the forum forever and has given endless good advice on umbrellas from the time she was at Contractor Umbrella and then started up a new company. I've used her umbrella and couldn't fault it. Shes garnered a good amount of respect in her time here.

EDIT : Not forgetting she could beat most of us in an arm wrestle and then drink us under the table afterwards.

[eek]

<modsnip>

Because she has been working with me on something I'm working on for a long time now which means I can (personally) confirm every single penny goes to the worker

[eek]

Sorry I should have clear, every penny after the agreed umbrella fee and tax due to the government is either paid into the worker’s pension or paid to the worker.

In fact the only issue that (continually) comes up with Clarity’s payroll is where the umbrella fee changes when the umbrella fee is reduced to reflect not all the month was worked.

and if you want to complain about the amount of tax you pay when working through an umbrella it’s either optional (because we could be working outside IR35 and are taking the hit) or it’s because the agency lied about your contract rate (and should be advertising a PAYE rate for inside IR35 work).

[northernladuk]

Off topic quote removed.

Please stop trolling prof. If you've something useful to add or a question feel free to ask.