Years ago I worked for agencies, not everyone’s cup of tea but it’s what I’ll be going back to doing. Nowadays I see two levels of wages, one PAYE and the other using an ‘umbrella’ company. The difference can be as much as £3ph which sounds good, but is it really just another third-party dipping into your salary? What are the pros and cons, do you actually make more because of the higher hourly rate, or is the higher rate lost in fees and commissions?
Pros: maybe up to £3/hr more depending on shift/day worked
Cons: no holiday pay, administration fees, liability for unpaid taxes, and everything else
Grandpa:
Years ago I worked for agencies, not everyone’s cup of tea but it’s what I’ll be going back to doing. Nowadays I see two levels of wages, one PAYE and the other using an ‘umbrella’ company. The difference can be as much as £3ph which sounds good
It is until you realise the £3/hr has to cover your holiday pay, employers NI you’ll have deducted by the umbrella company, workplace pension contributions which are all things that cost the agency in addition to the hourly rate they get on PAYE. And then there’ll be the weekly admin fee from the umbrella company as well.
If the PAYE rate is around £10-£11/hr and the umbrella rate is £3 more then you’re no better off than being on PAYE and in fact due to the flat rate umbrella company admin fee the fewer hours you work the worse off you are per hour.
Grandpa:
Years ago I worked for agencies, not everyone’s cup of tea but it’s what I’ll be going back to doing. Nowadays I see two levels of wages, one PAYE and the other using an ‘umbrella’ company. The difference can be as much as £3ph which sounds good, but is it really just another third-party dipping into your salary? What are the pros and cons, do you actually make more because of the higher hourly rate, or is the higher rate lost in fees and commissions?
I’ve just started this agency lark and just went for paye , this week £12.50 ph for driving a rigid ( paid class1 rate for doing job ) , think the other schemes are £1 ph more
The £12.50 looks good up to £9 ish ph last job ( employed ) but to be honest I’d still prefer working for a company , and that’s my aim
If you are going down the umbrella route, you need to work out what you are losing in accountant/admin fees. Then add in paying yourself holiday pay, ours grossed out around 750.00 per week, for four weeks. Then there is the employer pension contribution of 3% (has it gone up yet?, and not interested in the arguments about whether you should have a pension or not, it’s free money from the employer). Then there is sick pay; statutory may not be much, but it’s better than nothing. Are you getting paid if there is a downtown in work? At least PAYE you know you are guaranteed 8 hours even if you dont turn a wheel.
Add that little lot up and then work out if it’s better.
albion:
If you are going down the umbrella route, you need to work out what you are losing in accountant/admin fees. Then add in paying yourself holiday pay, ours grossed out around 750.00 per week, for four weeks. Then there is the employer pension contribution of 3% (has it gone up yet?, and not interested in the arguments about whether you should have a pension or not, it’s free money from the employer). Then there is sick pay; statutory may not be much, but it’s better than nothing. Are you getting paid if there is a downtown in work? At least PAYE you know you are guaranteed 8 hours even if you dont turn a wheel.Add that little lot up and then work out if it’s better.
This is the correct spot on answer.
Even Ltd only works out better (some times) because you are fiddling the tax system.
I recently was offered a job (and started but left for my own reasons) which was paye. Was paid 45 hours a week no matter what happened. Most blokes averaged under 30 hours work a week.
Oh plus the free CPC (paid), the free death in service benefits, the free uniforms and other benefits such as maternity leave. Lest we forget after 2 years service having some protections from being sacked.
Personally I prefer agency work - I’ve only tried paye direct employment once and was burnt badly. But I think for 99% of people a proper job is far better.
I kind of suspected what I’ve heard. If the ‘umbrella’ route was as fantastic as the agencies make out with promises of increased pay at the user end, everyone would be on them. I’m going to do this until I retire in a couple of years and so unsociable nights, max hours and five/six nights of repetitive dull trunking is right up my street! Sainsbury’s or Asda agency PAYE here we come. 
Grandpa:
I kind of suspected what I’ve heard. If the ‘umbrella’ route was as fantastic as the agencies make out with promises of increased pay at the user end, everyone would be on them. I’m going to do this until I retire in a couple of years and so unsociable nights, max hours and five/six nights of repetitive dull trunking is right up my street! Sainsbury’s or Asda agency PAYE here we come.
Doubt the agencies will let you go on PAYE (for Sains atleast) because if they do after 12 weeks they need to give you the same money and terms as the full timers.
I’ve done it. And it was the best supermarket I’ve worked for by a country mile. But none of the long term agency lads (inlcuding me) were PAYE.
Good luck bud.
When I did umbrella (nova) It felt they was earning more out of it than me. Been doing Ltd since 2013 which so far worked well but if I was starting a fresh now and plan to retire in a couple of years I would be do PAYE
sammym:
Grandpa:
I kind of suspected what I’ve heard. If the ‘umbrella’ route was as fantastic as the agencies make out with promises of increased pay at the user end, everyone would be on them. I’m going to do this until I retire in a couple of years and so unsociable nights, max hours and five/six nights of repetitive dull trunking is right up my street! Sainsbury’s or Asda agency PAYE here we come.Doubt the agencies will let you go on PAYE (for Sains atleast) because if they do after 12 weeks they need to give you the same money and terms as the full timers.
I’ve done it. And it was the best supermarket I’ve worked for by a country mile. But none of the long term agency lads (inlcuding me) were PAYE.
Good luck bud.
Years ago I used to do Asda or Sainsbury’s on Sundays and although the odd few drivers were Ltd, it was still a novelty. Now I see the two rates advertised so I’m assuming it’s a choice?
Now that it is harder to get what used to be “legit expenses” - one might as well chase the PAYE, so you know where you stand. There’s still no sick pay other than SSP but at least you get that 12.07% uplift for holidays now.
Winseer:
Now that it is harder to get what used to be “legit expenses” - one might as well chase the PAYE, so you know where you stand. There’s still no sick pay other than SSP but at least you get that 12.07% uplift for holidays now.
Right or wrong, the way I look at it is this. From the paying company to what you actually get is dependent on how many people come into contact with your wage before you get it. Whatever your rate, the agency have already taken their cut. Then the government pile in and take their share. The last thing you need is an umbrella company taking their commission out of it. In other words, the less people involved the more you’re likely to get. I read about umbrella companies advertising how wonderful they are and their low rate of commission, but none of them explain how you’d get more using them than you would on PAYE.
HMRC are clamping down on umbrella. Might seem good now, but wait until they catch up and present you with a nice tax bill.
I went back agency in November last year, on paye. No nasty surprises then and luckily the company that they put me in, took me on.
Ken.
Quinny:
HMRC are clamping down on umbrella. Might seem good now, but wait until they catch up and present you with a nice tax bill.
My mate had a bill for over £3,000. Highest I’ve seen was posted on here for over £15,000. HMRC’s stance now is that if you don’t own the wagon you can’t be classed as self employed. When you read the rules for what classifies as self employment and be honest with yourself it is clear it doesn’t qualify as such being a driver through an agency.
My first week agency , paye , 39 hrs , £628 gross , 33 hrs driving a rigid , 6 hrs sat in a classroom on days
£16.10 p/hr driving a class 2 rigid on agency seems a bit high to me
peirre:
£16.10 p/hr driving a class 2 rigid on agency seems a bit high to me
I did mon - fri 33 hrs in rigid , £12.50 ph ( paid class1 rate ) , guaranteed 8 hrs per day , then sun , 6 hrs in a classroom ( £16 ph ) guaranteed 8 hrs , £628 ( it should be a bit more as I had a 4 hr , 2x5 hr shifts mon- fri & last day was 11 hr 30 so should get xtra 3 hrs X £12.50 , so more like £660/£670
This week 5 X shifts of Grantham - Swanley - Grantham , £12.50 ph but working 17.30 - apx midnight , guaranteed 8 hrs , driving artic
So this week in a sense is not as good rate wise as will be working evenings , driving artic for same rate as I got for rigid / days last week , but just tri change per shift , and not multi drop as like last week
That said if the bleeders would answer my application I’d either be at brakes , yearsleys ( on books ) or xpo agency , I’m just not cut out for agency
albion:
If you are going down the umbrella route, you need to work out what you are losing in accountant/admin fees. Then add in paying yourself holiday pay, ours grossed out around 750.00 per week, for four weeks. Then there is the employer pension contribution of 3% (has it gone up yet?, and not interested in the arguments about whether you should have a pension or not, it’s free money from the employer). Then there is sick pay; statutory may not be much, but it’s better than nothing. Are you getting paid if there is a downtown in work? At least PAYE you know you are guaranteed 8 hours even if you dont turn a wheel.Add that little lot up and then work out if it’s better.
Not sure about this, since when have agencies paid PAYE drivers if there’s no work?
Pay between assignment contracts exist but you will jump through a zillion hoops to get anything, they certainly won’t just pay 8 hours carte blanche.
ATJT:
albion:
If you are going down the umbrella route, you need to work out what you are losing in accountant/admin fees. Then add in paying yourself holiday pay, ours grossed out around 750.00 per week, for four weeks. Then there is the employer pension contribution of 3% (has it gone up yet?, and not interested in the arguments about whether you should have a pension or not, it’s free money from the employer). Then there is sick pay; statutory may not be much, but it’s better than nothing. Are you getting paid if there is a downtown in work? At least PAYE you know you are guaranteed 8 hours even if you dont turn a wheel.Add that little lot up and then work out if it’s better.
Not sure about this, since when have agencies paid PAYE drivers if there’s no work?
Pay between assignment contracts exist but you will jump through a zillion hoops to get anything, they certainly won’t just pay 8 hours carte blanche.
True, my bad. I was thinking PAYE for an employer.
Conor:
Quinny:
HMRC are clamping down on umbrella. Might seem good now, but wait until they catch up and present you with a nice tax bill.
My mate had a bill for over £3,000. Highest I’ve seen was posted on here for over £15,000. HMRC’s stance now is that if you don’t own the wagon you can’t be classed as self employed. When you read the rules for what classifies as self employment and be honest with yourself it is clear it doesn’t qualify as such being a driver through an agency.[/quot
MSC Legislation totally different to an Umbrella Co. Only reason your mate got a tax bill was because of his Accountants falling foul of the MSC legislation meaning they had too much control of his company for it to be a legitimate stand alone company, the tax bill your mate received was the difference between what he had paid via his set up via his ltd company and what HMRC maintain he should have paid as PAYE. Simples