Explaining Ltd, PAYE & Umbrella
Contract Options
There are a number of options that may be open to you subject to the IR35 status of the assignment:
- Personal Service Company (Ltd)– If your assignment is outside IR35 you may choose to provide your services via a Ltd Company. We can introduce you to specialist contractor accountancy companies who offer advice and professional services or you can seek services from an accountancy provider of your choice.
- Umbrella Company – You will be employed via a third party who make all relevant tax deductions and pays your net salary to your personal bank account.
Personal Service Company (PSC Ltd Company)
Contractors often decide to work via their own personal service companies. This separates workers' personal tax affairs and those related to their business. It can allow a worker to pay themselves in a more tax-efficient way.
A PSC is a company that is owned by a sole individual shareholder and director. It allows the director to benefit from being paid by a mixture of dividend payments and salary utilising lower tax bandings. Whilst this is a legitimate way of providing services to a client, the worker and client must agree that the assignment is outside of IR35 legislation.
Umbrella Companies
Umbrella Companies are third parties who offers employment and payroll services. The umbrella company offers you continuous employment across your assignment.
We pay the umbrella company an assignment rate which includes all employment costs, taxes and holiday pay. The umbrella company then deducts employment costs, personal tax and national insurance as well as arranging auto-enrolment to pension schemes and holiday payments.
They pay the worker net monies and pay all relevant taxes to HMRC. The worker receives an offer Tax documentation from the umbrella company (P45, P60 and P11D etc). Please talk to your consultant if you wish to understand more.
Our Fees
We are a financially secure, independent recruitment agency. We charge competitive fees but use our profit to develop and grow our business. We are open and transparent with all our contractors and clients about our charging models.
Referencing
We take a minimum of two technical references for every candidate. We have developed a sturdy verbal referencing procedure backed up by full documentation. This means we can identify and supply the very best talent. References help us to differentiate between the excellent, the very good and the not so good.
Right To Work
We have a legal responsibility to validate each candidate's legal right to work. We ask for proof of ID with candidates using the Right To Work Checklist as referred to on the UK Government's website.
We can appreciate this is a lot to take in, please contact us with any questions you may have – we're always happy to help!
