What is the difference between PAYE and Ltd/umbrella pay?

[WhiteBear]

hi i am about the apply for a job, but i am confused between the PAYE pay to ltd/umbrella.

salary/wage= �amount per hr + Holiday (PAYE) is less than �amount per hr (ltd/umbrella).

why is pay different? it is almost �2 different

the agency and asked if im an PAYE, and i said im not sure.........

advise anyone? x

[buildersmate]

The difference should roughly equates to employer's NI contribution - about 11% of the gross pay.
You have to be an employee of the agency and hence will be PAYE unless you have your own limited company - in which case they could pay your Ltd Co. gross.
That is the way that HMRC forces agencies that fall under the umbrella of the definition of Managed Services Companies to operate.

[WhiteBear]

hey buildersmate

many thanks for the info, makes more sense now.. =)
xx

[gonzo00]

hi wb! please go paye...i've been ltd company for a few years now and it's a bloody nightmare....given the choice again i'd go paye and let someone else do all that paperwork. just think ltd. company..no holiday pay..no sick pay...dealing with accounts etc..it's just too much hassle and not worth the few extra quid per hour.

[WhiteBear]

many thanks Gonzo, :) im deffo a PAYE then :)

grrr my laptop touch pad isnt working soo annoying

[gonzo00]

lol! no probs wb....suffice to say i'm in a spot of bother with revenue and customs (due to dodgy accounting)..hence i'm living in exile in france for the moment! :0)

[WhiteBear]

oh dear gonzo :)
bet its better than living in the UK :) x

[gonzo00]

well it would be if i could get my money out of the uk and wasn't working 16hr shifts here! :0)

[buildersmate]

It is of course true that running a small Ltd Co involves paperwork. However the advantages are more than Gonzo mentions. For example, working for an agency does not allow you to deduct the cost of getting to/from your place of work (the end client) from your gross earnings before tax/NI is calculated. That is just one example. If the agency 'places' you miles from where you live, that could cost a lot of money.