As a nursing, education, social work or social care contractor, how you access day-to-day, short-term, or long-term work can be complex. There are lots of choices on how you find work and how you access your pay and benefits. While becoming a limited company contractor is often not possible for temporary workers in the health and social care sectors, you may instead be choosing between agency PAYE vs umbrella companies.
Whatever route you ultimately choose it is important to remember that if you are employing yourself, you’ll need to comply with IR35 regulations, which determines whether you are genuinely self-employed or an employee in the eyes of HMRC. Complying with IR35 regulations is crucial, you can’t opt-out and non-compliance can leave you with significant unpaid tax. This is why becoming a limited company contractor is not an option for 99.9% of support workers in the health and social care industries.
Always check that you are working within the law. Beware of any agencies or umbrella companies who are not transparent around IR35. Making an informed decision ensures you get the most from your career and meet all the UK’s legal and professional requirements.
Let’s compare the two options, agency PAYE vs umbrella companies more closely.
Option 1: Registering With an Umbrella Company
Umbrella companies handle all your taxes and benefits, providing you with the protections associated with being an employee. This means they take care of income tax, National Insurance contributions, and often provide additional benefits such as holiday pay, sick pay, and maternity leave. For those who prefer to avoid the administrative burden of being limited company contractor, this can be a convenient and stress-free option.
However, not all umbrella companies operate with transparency and integrity. Some engage in deceptive practices, such as hidden fees or withholding holiday pay, which can significantly impact your earnings. Working through an umbrella company might mean losing protections like sick pay or maternity leave if the company does not comply with employment regulations.
The worst-case scenario for agency workers using non-compliant umbrella companies is becoming entangled in a tax avoidance scheme. This can lead to severe legal and financial consequences, including:
- Facing legal action and fines from HMRC, which enforces strict rules against tax evasion and avoidance.
- Unexpected tax bills and penalties can create significant financial hardship.
A government consultation was held in June 2023 aimed at tackling non-compliance in the umbrella company market and more detailed guidance as well as an online pay-checking tool will be released later in 2024. The government is also considering introducing statutory due diligence requirements for businesses using umbrella companies. This aims to reduce non-compliance and protect workers.
These new regulations will make umbrella companies a safer option for workers, but potentially make it more complex and less attractive for businesses to contract employees using umbrella companies.
Umbrella companies provide convenience and employee benefits but require careful selection to avoid potential problems. Check out the Freelancer and Contractor Services Association (FCSA) for a list of accredited umbrella companies.
Option 2: Register with a vetted employment agency that runs its own payroll, like Vetro
Another option is to choose to work with a specialist employment agency that runs its own PAYE payroll, like Vetro.
Agencies handle all the administration for you, so you don’t have to worry. Unlike an umbrella company, at Vetro we pay all our temporary workers PAYE weekly, and we don’t charge you for this service. Even a compliant umbrella company charges you to use its services!
You also have access to a dedicated inhouse payroll team who will ensure you receive your payslips and can answer any queries. We also offer you the option to accrue your holiday in a pot or have it paid out to you weekly.
Another advantage of working with an agency is the flexibility and variety it provides. You can choose your hours and decide which bookings to accept, and you’ll have the opportunity to take on a range of assignments in different environments and organisations. Agencies also offer training and development opportunities allowing you to stay competitive and up to date with industry standards and best practices.
Agencies like Vetro also offer specialist support in your industry. Because we specialise in healthcare, education, housing, social care, and social work roles, we understand the unique challenges and demands of these industries and can offer tailored support and guidance.
At Vetro we also offer all our candidates the following benefits:
Career Toolkit
We offer CV and interview advice to help you secure your assignments and resources designed to support you.
Training and development
Over 20+ CPD accredited courses as well as safeguarding, healthcare and compliance training. You can even access our BILD accredited and PMVA training at a fraction of the cost.
Competitive Weekly Pay
Competitive weekly pay for all our agency roles. Choose to accrue your holiday or have it paid out weekly. An in-house payroll team means no umbrella fees or additional costs, ever!
£500 Golden Ticket Draw
For every 150 hours worked you’ll gain an entry into our Golden Ticket draw to win £500, with no limit on the number of entries you can accumulate. The draw takes place every 13 weeks and is open to all sectors.
Referral Scheme
Exceptional people know exceptional people. Which is why you can earn high street vouchers for every referral you make, up to £500 worth, as a thank you.
24/7 Support
A personal Recruitment Consultant to help you navigate assignments and offer advice on everything from payment details to statutory sick pay (SSP) to maternity absence.
Weighing the benefits of agency PAYE vs umbrella companies, choosing an agency with its own PAYE payroll is the most cost-effective and safe option for support workers. Agencies like Vetro eliminate the costly fees often associated with umbrella companies and provide transparent, compliant payroll services. This approach not only safeguards your earnings but also ensures full compliance with HMRC regulations.
By opting for agency PAYE over an umbrella company, you benefit from dedicated support, flexibility, and a range of professional advantages, making it the superior choice for your career in the health and social care sectors.
We hope that you’ve found this article comparing agency PAYE services vs umbrella companies helpful. If you’d like more information on how Vetro could help you find meaningful agency work in nursing, education, housing, social work or social care, or just to talk through your options get in touch with us today.
