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Umbrella vs Paye

When deciding whether to be paid via an Umbrella Company or on a PAYE (Pay As You Earn) basis, this helpful guide can hopefully give you an insight into the differences. Any decision you make can then be made on a more informed basis.

UmbrellaPaye
Workers can choose to have their holiday pay paid immediately (included in their hourly rate) each week or accrue them. Workers can usually only have their holiday pay accrued and not paid immediately.
Umbrella Company is responsible for collecting and chasing the correct ID and Proof of Address before paying legally.Bluestones Medical is responsible for collecting the correct ID and Proof of Address before paying legally.
Umbrella company can pay wages for numerous Agencies and keep the worker under one tax code, meaning they should not underpay tax.The worker will be on a tax code allocated by HMRC, only for use by Bluestones Medical.
Umbrella company only requires one holiday request form when the worker is claiming holiday pay (if accrued). If the candidate has chosen to have their holiday pay paid immediately, they will get 100% of their holiday pay. The worker will hold accrued holiday amount and will have to submit a holiday request form. A worker is at risk of losing holiday pay if unused or forgotten at the end of the contractual year.
Umbrella company is responsible for administering any enquiries and changes including tax codes (coding notices) attachment orders, Student Loans, maternity/paternity pay. Bluestones Medical is responsible for administering any enquiries an changes including tax codes (coding notices), attachment orders, Student Loans and maternity/paternity pay
Umbrella company will hold the legal responsibility should HMRC choose to investigate any of the above. They will ensure that NMW or NLW is not broken. Bluestones Medical will hold responsibility should the HMRC choose to investigate any of the above
Employer’s NI, holiday pay and Umbrella’s margin is all wrapped up in the Umbrella rate for the agency’s ‘Cost of sale’. The ‘Cost of Sale’ is built from the rate by adding holiday pay and Employer’s NI to the flat ‘flat rate’
Pension and the apprentice levy costs are included in the Umbrella rate. Pension costs and apprenticeship levy (if turnover is above similar) will have to be added to the rate of pay
Umbrella companies can only be used within an NHS setting PAYE can be used across all settings i.e. NHS, Private Hospitals, Nursing/Residential Homes

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