Reply to: Holidays via agency and umbrella PAYE

[lucyclarityumbrella]

Just ask for a payslip with accrued holiday, and check as to whether they tax when accrued or when repaid, just so you can understad the payslip and taxes.

[lucyclarityumbrella]

(Sorry Lucy, you're not on it I'm afraid, and they are set on only using their list), and trying to work out take home pay etc compared to a permy job that I might have as an option.

[ladymuck]

Income tax is based on the assumption that you will have the same rate of pay for the whole tax year so tax is deducted based on a full working year. If you work less, you'll get a rebate.

NI just continues to accumulate once you hit certain thresholds.

You don't know how many weeks you will be working, so how do you expect any calculator to give you the answer you're looking for?

What the calculators are doing is giving you a like for like basis on which you can compare umbrellas to check that the only difference between them is their fee.

The holiday aspect may be dependent on the contract you agree with the umbrella, and so you'd need to contact them and ask for a full illustration.

[Blert596]

Hi,

It looks as if I may have to be going down the Umbrella/PAYE route at the end of next month. End client has said no more PSCs so that's it.

Ive started looking at Umbrellas that have been chosen by the Agency (Sorry Lucy, you're not on it I'm afraid, and they are set on only using their list), and trying to work out take home pay etc compared to a permy job that I might have as an option.

On the calculators why does it calculate your pay based on 52 weeks work when this is certainly unlikely to happen. Why is there not an option to calculate it (automatically) over say 47 weeks and return a monthly take home based on that? Or is that too simplistic - providing I take 25 days.

If I'm being paid £100 a day then it takes this as 500 x 52 and then spreads the £26000 for breakdown of tax margins etc to give me a take home amount.

Surely if I'm taking say 4 weeks leave then the true amount would be based on 500 x 47 which would provide significantly lower monthly take home, but a constant throughout the year.

None of the calculator breakdowns seem to show any ref to holidays/12% in their workings.

An example below based on 100 a day rate - or do I have this all wrong.

Margin: 25
Employer NI: 37.21
Employment Tax: 2.18
Employee Tax: 39.01
Total Taxes: 110.75
Total Net Inc: 364.25

[lucyclarityumbrella]

IF you are going via an umbrella, then 12.07% of that rate will be taken to allow for "holiday pay".

Yep the gross contract rate is deemed to cover holiday if this is an umbrella assignment.

[WTFH]

So if the advertised rate is £450 via PAYE, then we can assume that you'd be paid that for 5 days a week, 52 weeks of the year (even if you take days off)?

No.
You'd need to discuss the rate with your chosen umbrella.

e.g.
You've not mentioned if £450 a day is gross or net pay - i.e. before or after tax & NI.
You've not mentioned if the £450 is from an umbrella, or from the agency/client
Just by saying it is "Via PAYE" means very little.

IF you are going via an umbrella, then 12.07% of that rate will be taken to allow for "holiday pay".

[northernladuk]

So if the advertised rate is £450 via PAYE, then we can assume that you'd be paid that for 5 days a week, 52 weeks of the year (even if you take days off)?

No.

[K12AN]

So if the advertised rate is £450 via PAYE, then we can assume that you'd be paid that for 5 days a week, 52 weeks of the year (even if you take days off)?

[lucyclarityumbrella]

Thanks for the correction - it's been a long time since I've been under an umbrella.

welcome

[WTFH]

If the holiday is accrued it is taken at 12.07% (government requirement), they are not allowed to charge for statutory payments such as SSP, MP & PP.

Thanks for the correction - it's been a long time since I've been under an umbrella.

[lucyclarityumbrella]

Is this based on your actual experience, or just the slippery slope of ideas?

An umbrella will deduct a % to allow for holidays and sickness. They won’t lose out. You take more than they expect, they up the %. You take less, they pay it back.

If the holiday is accrued it is taken at 12.07% (government requirement), they are not allowed to charge for statutory payments such as SSP, MP & PP.

[lucyclarityumbrella]

They'll take a bit off what they pay you and when you take holiday you claim it back. Keeps your taxes low as it's a pre tax deduction but you end up paying when you claim the money.

With an umbrella if the holiday is accrued it may be taxed at the point it is taken - depends on the brolly's process but you can always ask the question.

[WTFH]

IMO this thread needs to be one of the most viewed on here and surprised this issue has not been questioned more.

The holiday situation with Umbrellas is nuts. Basically as soon as you get in a situation whereby it says 'you will be paid if you take the holidays or not' is surely open to abuse...as, to me, it immediately translates into 'nobody is going to keep tabs on the holidays as we are now in a position when we have a client, and agent and an Umbrella company' .... basically you are going to have contractors taking way more holidays then entitled for as nobody will know how many days have been taken.

And don't even get me started on sickness pay .... just how the hell can that possibly work?

Is this based on your actual experience, or just the slippery slope of ideas?

An umbrella will deduct a % to allow for holidays and sickness. They won’t lose out. You take more than they expect, they up the %. You take less, they pay it back.

[BABABlackSheep]

With some umbrella companies you take holiday, you get paid less monthly.

With some, they reduce your salary to pro-rata x amount of holidays.

So I was told.

[northernladuk]

IMO this thread needs to be one of the most viewed on here and surprised this issue has not been questioned more.

The holiday situation with Umbrellas is nuts. Basically as soon as you get in a situation whereby it says 'you will be paid if you take the holidays or not' is surely open to abuse...as, to me, it immediately translates into 'nobody is going to keep tabs on the holidays as we are now in a position when we have a client, and agent and an Umbrella company' .... basically you are going to have contractors taking way more holidays then entitled for as nobody will know how many days have been taken.

And don't even get me started on sickness pay .... just how the hell can that possibly work?

I think you need to read this thread again....