Agency PAYE vs umbrella

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So you’ve secured an assignment via a recruitment company, but what happens next? Well, you’ll typically be offered two different pay rates for you to choose between – yes, yet more decisions!

Never fear, however, as we’re here to help. Because we’re with you all the way, we can provide you with all the information you need to make an informed decision.

The first option is to work via an agency on a Pay As You Earn (PAYE) basis – meaning you won’t have to worry about completing tax returns.

Alternatively, you’ll be given the option of joining an umbrella company, such as Parasol. As with agency employees, umbrella contractors escape the hassle of filling out tax returns – leaving them free to concentrate on their assignments.

So what’s the difference we hear you cry? The answer is quite a bit – as this table will demonstrate:

Agency PAYE vs Umbrella PAYE comparison table

As we hope you can see, joining an umbrella company is by far the better option. Not only will you be free to work with a number of different agencies, you can also claim legitimate business costs and expenses and receive employment rights and benefits usually afforded to “permie” workers. Seems like a no-brainer, doesn’t it?

Well actually, this isn’t the end of the story. That’s because these aren’t the only options available to contractors – they’re just the ones typically offered by agencies. The others involve operating as a sole trader or limited company.

Don’t worry though, as we’ve created a handy guide that explains the pros and cons of all four options. Check it out here.

Want more help?

If you’d prefer to discuss your different options with somebody, we’re here to help. Our dedicated team is on hand to provide unbiased guidance that is based on your own circumstances – so you can be sure to choose the route that’s right for you.

To get the best advice, contact our team today on 0800 458 0818 or email

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