Being paid through your agency’s payroll

Not all agencies run a payroll for contractors that they place on temporary assignments with their clients.

In most circumstances Income Tax law forbids a UK agency from making a gross payment to an individual. So, if you are working through an agency that doesn’t run a payroll for its contractors the options are to either have your own limited company or work through an umbrella company.

If you are working through an agency that will pay you through their payroll then your entire income will be subject to full PAYE and NI contributions. You will be unable to offset eligible business expenses against your earnings even though you have to incur them to do your job. If you work for more than one agency then you will have numerous payroll contacts and will never be on the correct tax code meaning that you will be paying more tax than you should.

If you want to be enjoy the benefits of being employed but also the perks of being a contractor then an umbrella company is for you. The Smart Pay Umbrella offers:

  • invoicing your agency/client for the hours you have worked and collecting payments
  • calculating the tax and National Insurance contribution, deducting and paying it to the UK authorities
  • making a net payment in a range of currencies into your personal bank account
  • compliance with all company and other statutory issues, including company law requirements to file accounts and returns to Companies House
  • calculating and making payment of VAT and corporation tax liabilities
  • running payroll calculations and making returns and various other statutory requirements
  • providing business insurance to meet claims made by your clients against negligence or service deficiencies
  • business expenses can be offset against your gross earnings

Whether you are new to contracting or unhappy with your current provider, please get in touch with us so we can explain what we do, how it works and help you decide if it is the best choice for you.