Reply to: Umbrella v Umbrella CIS v PAYE

[lucyclarityumbrella]

You seem to know your stuff.
So what is better in your opinion? PAYE or umbrella?
It is a 6 month outside IR35 contract.

Hi JamesC34 ,

For PAYE they should be quoting you a taxable salary rate, this is subject only to Employees NI and PAYE tax.
For Umbrella it is an assignment rate, this is subject to employment costs (ERs NI, Apprenticeship levy and the umbrella margin) before reaching your taxable salary.

If you want me to have a look at what the umbrella rate converts to as a taxable salary then let me know the rate they are offering.

[cojak]

You seem to know your stuff.
So what is better in your opinion? PAYE or umbrella?
It is a 6 month outside IR35 contract.

PAYE = Agent pays you (and takes out appropriate amount of tax - which they WILL DO because they're on the hook to HMRC that you'll pay it).

Umbrella = the umbrella pays you (and takes out appropriate amount of tax - which they WILL DO because they're on the hook to HMRC that you'll pay it, but they'll also put some into a pension pot if you want).

You'll note that irrespective of it being outside IR35 you will be paying the appropriate amount of tax.

(Note: appropriate = appropriate for an inside IR35 contract, outside IR35 = Ltd and only you are on the hook for tax).

[northernladuk]

Hang on you said it was inside?

And if you option is PAYE / Umbrella (which it won't be if it's outside) you need the actual figures from the Key Information Document you should have been given because we really can't answer that question for you.

The only way I could answer that question is for 1 particular scenario

• Inside IR35 contract
• 100% remote contract or very local client (so no travel)
• Desire to pay as much as possible into a pension
• In which case go umbrella...

I'd concur with the above and would be going umbrella as well. It's likely if you chose umbrella the agent (assuming there is one) will offer you the standard list of the big providers, Parasol, Giant, Paysteam etc... if they are flexible enough to let you nominate your own then your best bet is Clarity Umbrella.

You seem to know your stuff.

Don't let initial impressions fool you

[eek]

You seem to know your stuff.
So what is better in your opinion? PAYE or umbrella?
It is a 6 month outside IR35 contract.

Hang on you said it was inside?

And if you option is PAYE / Umbrella (which it won't be if it's outside) you need the actual figures from the Key Information Document you should have been given because we really can't answer that question for you.

The only way I could answer that question is for 1 particular scenario

• Inside IR35 contract
• 100% remote contract or very local client (so no travel)
• Desire to pay as much as possible into a pension
• In which case go umbrella...

[JamesC34]

No. PAYE is the agency running Payroll (or client) for a temp (inside) contract. FTC is effectively a temporary contract of employment getting all the rights the employees get. FTC tends be direct with the client the agency rarely employs for clients FTC requirements

https://topcv.co.uk/career-advice/ft...pecific%20task.

You seem to know your stuff.
So what is better in your opinion? PAYE or umbrella?
It is a 6 month outside IR35 contract.

[NotAllThere]

This is why I normally quote reply as the thread now is pointless.

OP - just pick a legitimate umbrella.

Edit: eek is PAYE just another term for a Fixed Term Contract?

That original post in full.

Been offered an outside IR35 contract role.

I am now being asked to choose between 'Umbrella', 'Umbrella CIS' and 'PAYE'.
This may be a dumb question but what is the difference?
I always thought that there were basically two types
Umbrella/PAYE = Inside IR35
Ltd Company = Outside IR35

I feel I am obviously missing something.

[northernladuk]

FTC not FTE

What you on about. That's what I put...

[ladymuck]

No. PAYE is the agency running Payroll (or client) for a temp (inside) contract. FTE is effectively a temporary contract of employment getting all the rights the employees get. FTE tends be direct with the client the agency rarely employs for clients FTE requirements

https://topcv.co.uk/career-advice/ft...pecific%20task.

FTC not FTE

[cojak]

No. PAYE is the agency running Payroll (or client) for a temp (inside) contract. FTE is effectively a temporary contract of employment getting all the rights the employees get. FTE tends be direct with the client the agency rarely employs for clients FTE requirements

https://topcv.co.uk/career-advice/ft...pecific%20task.

Ah, yes of course.

[northernladuk]

Edit: eek is PAYE just another term for a Fixed Term Contract?

No. PAYE is the agency running Payroll (or client) for a temp (inside) contract. FTC is effectively a temporary contract of employment getting all the rights the employees get. FTC tends be direct with the client the agency rarely employs for clients FTC requirements

https://topcv.co.uk/career-advice/ft...pecific%20task.

[cojak]

This is why I normally quote reply as the thread now is pointless.

OP - just pick a legitimate umbrella.

Edit: eek is PAYE just another term for a Fixed Term Contract?

[northernladuk]

So if he's now updated it...and I'd like to know why, then his question is moot. CIS is a bit odd but the other two are as standard as they come.

[eek]

So the OP has updated things to state it's an inside IR35 contract.

I haven't got a clue why CIS is being offered (as it shouldn't be) but the agency should be providing you with Key Information Documents that should show whether an umbrella or PAYE payroll is the better option.

Got the figures for both as it may be better to take the PAYE option given the increase in Employer NI come April..

[northernladuk]

How do you know it's an outside contract? Because the agent told you so or because you've been issued a proper SDS? No mention of LTDs? I'm wondering if the agents had your pants down by luring you in with the outside contract but it's simply not.

[cojak]

For IT contractors on an outside IR35 contract you are quite right. What you have in front of you is not an outside contract. CIS is the construction industry scheme. The others are umbrellas. And how they can give you PAYE with a straight face in a this instance is beyond me.

The agent is having you on.