adam277:
But Best Connection are offering a higher rate of pay for those being paid via an umbrella firm so curious if it is worth using or not.
No they’re not. You’ll come out worse off. When you’re on PAYE you get in addition to your hourly rate holiday pay and employers workplace pension contribution and those cost you nothing. Together they’re worth about 15.07% of your PAYE hourly rate. So if you’re on £10/hr PAYE you’re actually getting ~£11.50 including holiday pay and employers pension contribution.
Now for an employer to employ someone on PAYE it costs them:
Your hourly rate
Holiday Pay
Employers NI
Employers Workplace Pension contribution.
Apprenticeship Levy
It basically costs them about 27% more than your hourly rate to employ you so if you are on £10/hr it costs them roughly £12.70.
So how does this relate to umbrella companies? Well an umbrella company is still going to have to pay employers NI, apprenticeship levy, employers workplace pension contribution unless you opt out and holiday pay as those are all statutory under employment law and taxation. That is all going to come out of the hourly rate you’re paid as an umbrella worker that you get from the agency and then you still get employees NI and income tax deducted as well. Not only that umbrella companies do not work for free out of the goodness of their hearts so they’ll deduct a weekly fee too. So for you to be no worse off than working on PAYE with an umbrella company your hourly rate needs to be no less than 26% higher than the PAYE plus an amount that’ll cover the umbrella company payroll fee which could add another 50p/hr. I’m guessing Best Connection aren’t paying 27%+50p/hr more than PAYE.