If you can’t work under your own company or made the decision that it’s no longer the correct choice for you, consider going through an umbrella company, instead of being paid through an agency payroll.
Umbrella companies are simple. Essentially the contractor is an employee of the umbrella company. The agency then pays the umbrella company, who then deducts necessary contributions and pays your wage.
Taking the agency route, you are then an agency worker and make yourself responsible for making the required deductions and paying your salary.
With either option, there’s no need to worry about taxes, keeping accounts, or complying with IR35.
Differences between these options
Difference number one is that the umbrella company carries out the deductions, they will work out tax relief on allowable expenses where you are not subject to control or supervision. In turn, this leads to increase in money you take home as you only have to enter your timesheet and expenses online.
Another major difference is that there additional benefits for working for an umbrella company.
With either option you will have access to benefits such as sick pay, however with an umbrella company, you are under a contract of employment so no matter how many assignments you carry out, you will be paid under the same contract. This gives you a continuous record of employment which helps with other big decisions in life such as mortgages or loans. You also get provided one pension pot and ensures you’re on the right tax code.
Another benefit is that you will get an inclusive insurance package. This is something you wont received is you took the agency payroll option.
Some umbrella services can provide contractors free or discounted access to an employee rewards scheme. This can provide discounts in stores as well discounts for other necessities such as phone contracts, gym memberships, and so on.
Some umbrella companies can offer other services such as financial advisors who can offer advice on a whole host of topics.
At first glance it may appear that umbrella companies and agency payroll are roughly the same, however there are a whole host of benefits that an umbrella company can provide that agency payroll doesn’t.