Understanding PAYE, umbrella and limited company differences
When you register with Athona for locum, agency or temporary work, you’ll need to choose whether to become a Pay As You Earn (PAYE), Umbrella or Limited Company worker. It may seem complicated at first, but we’ve made things nice and simple.
If you choose PAYE, Athona will deal with all of your tax and National Insurance (NI) needs – we will even make payments to HMRC on your behalf.
If you choose a limited company, you will need to set up your own company, which Athona will then make a payment to.
Which one is best for me?
It’s up to you which option suits you best, but below are some pros and cons of each choice to help guide you:
With PAYE, in effect, you will become an employee of Athona. This means our payroll department handles your taxation and NI contributions, as well as providing you with a payslip for your records.
What’s more, if you ever have any concerns regarding your work or pay, this can be handled under one roof – providing seamless continuity of our services. We also do not charge a fee and there’s minimal setup required.
A limited company set up definitely offers a degree of freedom, and some benefits like being able to claim for expenses.
But at the same time, it’s your responsibility to both set up your company and maintain it. That comes with costs, and it takes time too.
*Depending on your contract, IR35 may apply to you. If IR35 does apply, Athona will be required to deduct the relevant tax and NI, and submit this to HMRC, on your behalf. Alternatively, if you are deemed to be working outside of IR35 you must handle your PAYE and NI yourself, rather than the body that is paying you.
- Control over self-payment and withdrawals
- Opportunity to use the flat rate VAT system (if certain criteria is met)
- Option to claim expenses
- Setup and admin charges apply
- IR35 legislation may apply*
- Responsibility for VAT & PAYE submissions to HMRC
- Personal financial information, as well as your name and address, will be publicly available from Companies House.
Umbrella companies act as the employer for those hired by agencies and ensure your taxation and national insurance obligations are taken care of. Choosing this option would essentially make you an employee of the umbrella company.
Concerned about selecting an umbrella company that’s using a tax avoidance scheme? The government have released this guide to ensure you don’t get caught out.
We run two payrolls per week. Any timesheets received before 2pm on a Tuesday will be paid to you on the Friday of the same week. Any timesheets received before 2pm Thursday will be paid to you the following Tuesday. Please also ensure that all information is completed in a clear and precise manner on the timesheet, including correct start and end times, and that the timesheets have been authorised. Unsigned or illegible timesheets may cause delays to your payment.
If you are paid via an umbrella company, you will need to check with them directly regarding their payroll days.
If you have a P45 from a previous employer, please email this into your consultant and we can update the tax code from that. If you do not have a P45 you can complete a starter declaration found here.
This will enable us to submit your details to HMRC so they can sent us the correct tax code to use. If you are set up with an umbrella company, you will need to send these documents directly to them.
Holiday pay is calculated at 12.07% of your hourly rate. This amount is accrued by us until you request it to be paid.
If you are paid PAYE or Limited, you will receive your payslip from us each week on either a Wednesday or Friday depending on when we have processed your timesheet. If you are paid via an umbrella company, the umbrella company will send you a payslip. Please retain these for future use, however if you require further copies, please let your consultant know and we can arrange for these to be emailed to you.
Claims are calculated on a case by case basis depending on a number of factors. If you are PAYE, please contact the payroll team for more information on how to make a claim. If you are paid via an umbrella company, you will need to discuss any claims directly with them.
Please send your new bank details to your consultant so they can forward them on to the payroll team. Any bank details received before 5pm each Friday will be updated for any payments received the following week.
The upcoming Easter payroll deadlines are as follows:
Timesheets for week ending 24th March 2024
Timesheet cut off will be 5pm Monday 25th March 2024
Payment to be received Thursday 28th March 2024*
Timesheet cut off will be 5pm Tuesday 26th March 2024
Payment to be received Tuesday 2nd April 2024*
Deadlines the following week (timesheets for week ending 31st March 2024) will be the usual cut offs (Tuesday 2nd April at 2pm and Thursday 4th April at 2pm).
*If you are paid via an umbrella company, you will need to contact them for their specific deadlines/pay dates