Given that I can't access the thread but can read - I'll create a new thread to answer the questions
Are there any pros and cons of including holiday pay into my weekly payments when using an Umbrella company? One option is to take the holiday pay later on but not sure if there is any benefit of that.
Technically it's illegal to pay holiday pay in advance - however, we are all well paid contractors and know that we need to keep money for a rainy day so there is zero reason for us not to insist on Holiday pay being paid in advance as that weeks payment is made.
* I'm ignoring a whole other pile of things here - but given that we should be able to manage money it's fair to say you want your money ASAP.
I have another question on holidays. My agency has offered me x Umbrella day rates which are inclusive of holidays and the payee rates i have been offered are £150 less than the Umbrella rate but they are exclusive of holidays. Is this a normal practice ?
Yep see my comment above - a PAYE rate means that you still need to be paid when you are on holiday so the rate will be reduced to allow the agency to pay you on the 28 days (assuming you work all year) you take off as holiday.
A PAYE rate will be significantly less because an umbrella rate needs to reflect the following costs
1) Employer NI at 15.05%
2) Apprenticeship levy at 0.5%
3) Holiday pay at a minimum of 12.07% (and it often should be more than that).
4) the margin the umbrella is charging
All that comes to a total of 27.62% before the margin so you can see why the PAYE rate is so much less. As to whether its better to go PAYE rather than using an umbrella the 2 factors to consider are:-
Is the umbrella rate significantly more than 27.62% higher than the PAYE rate
or
Do you wish to put a lot into the pension as you could add about £6,000 into your pension if you put £40,000 a year into it using an umbrella (thanks to salary sacrifice).
Are there any pros and cons of including holiday pay into my weekly payments when using an Umbrella company? One option is to take the holiday pay later on but not sure if there is any benefit of that.
Technically it's illegal to pay holiday pay in advance - however, we are all well paid contractors and know that we need to keep money for a rainy day so there is zero reason for us not to insist on Holiday pay being paid in advance as that weeks payment is made.
* I'm ignoring a whole other pile of things here - but given that we should be able to manage money it's fair to say you want your money ASAP.
I have another question on holidays. My agency has offered me x Umbrella day rates which are inclusive of holidays and the payee rates i have been offered are £150 less than the Umbrella rate but they are exclusive of holidays. Is this a normal practice ?
Yep see my comment above - a PAYE rate means that you still need to be paid when you are on holiday so the rate will be reduced to allow the agency to pay you on the 28 days (assuming you work all year) you take off as holiday.
A PAYE rate will be significantly less because an umbrella rate needs to reflect the following costs
1) Employer NI at 15.05%
2) Apprenticeship levy at 0.5%
3) Holiday pay at a minimum of 12.07% (and it often should be more than that).
4) the margin the umbrella is charging
All that comes to a total of 27.62% before the margin so you can see why the PAYE rate is so much less. As to whether its better to go PAYE rather than using an umbrella the 2 factors to consider are:-
Is the umbrella rate significantly more than 27.62% higher than the PAYE rate
or
Do you wish to put a lot into the pension as you could add about £6,000 into your pension if you put £40,000 a year into it using an umbrella (thanks to salary sacrifice).
Comment