Working for an Agency

Undertaking an Assignment as an employee of a Recruitment Agency should be hassle free but does it pay?

The Advantages

 

Working on an assignment through an Agency is a common activity for labour only contractors or consultants. The easiest payment structure is to become an employee of the Agency for the duration of that assignment. Like any employee the worker will be paid under PAYE, the Agency will not be charging a fee and should support all normal employee statutory rights such as holiday pay. For short term assignments, where there are no expenses to be claimed, this is probably the right choice.

 

The Disadvantages

 

Smaller agencies often do not have a payroll department. Moving from Agency to Agency as assignments change can be a problem.  With changing assignments there is no continuity of employment or self employment to support mortgage applications and other credit related enquiries.  Agencies do not generally pay tax deductible expenses. Generally those who qualify to work legitimately on a self employed basis pay significantly less tax than Agency employees.

 

Play the Numbers

Instant comparison between the forms of business; see the effects of legitimate expense claims, consider Flat Rate VAT or just adjust hourly rates and time spent. Look for your personal jackpot.

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Talk to Us

Of course in the end there is no substitute for targeted personal advice. Your individual circumstances matter. You need our expertise. Get a free initial consultation – probably the best freelance decision you will make!

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Instant Information

Our tax calculator is speedy. It is designed to give you results as you enter valid data – on the spot, in front of your eyes! We update regularly to make sure it always reflects changes in tax law and practice.

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Fixed Data

Assumptions

General                                                                                                                              

• The user is over 21 and subject to tax in the UK
• The user wishes to minimise their tax liability
• The user is subject to national insurance i.e.he/she is not over retirement age
• Only current tax rates and limits are applied
• No tax mitigation payments are made e.g. pension contributions
• Only 3 digit letter 'L' tax codes shown in the drop down list can be entered 
• The user does not have a turnover greater than £100,000 where fewer reliefs and or higher taxes may apply

Expenses

• All miles claimed as expenses are for business use using a personally owned car or van
• All other expenses claimed are wholly, necessarily and where appropriate exclusively for the benefit of the business

Foremans LLP Charges

• Foremans fees associated with Limited Company, Sole Trader or Umbrella are as per published rates
• Foremans current Service Costs are allowed for in all calculations.

Holiday Pay

• Holiday pay is accumulated week by week by Umbrella or Agency employer but paid out during the year

VAT

• Limited Company or Sole Trader will be VAT registered
• Limited Company or Sole Trader will take advantage of Flat rate VAT
• Flat rate applied includes the benefit of the additional 1% applicable to the first year of VAT registration

Limited Company Conditions

• One director / one shareholder in a Personal Service Company
• Director of Personal Service Company elects to vote for 100% dividend after salary, costs and expenses
• Director's salary is maximum salary to the primary threshold for NI
• The Limited Company is trading normally i.e it is not subject to IR35 and is not a Managed Service Company

NOTES

• The Current tax rates are taken from the Fixed Data Table
• The current Value Added Tax Rate is 20% and is applied to all invoices and expenses as appropriate
• The Director's Salary is fixed in relation to National Insurance thresholds. Higher Rate Taxpayers should consider the advantages and disadvantages of a larger annual salary or bonus
• Higher Rate Taxpayers may wish to consider the advantages and disadvantages of shared ownership of their business
• Users with a tax code other than three digits and letter "L" may telephone or email our Development Department to request a detailed calculation
• Generally the use of an Umbrella rather than an Agency payroll is only efficient if sufficient weekly expenses are allowable and claimed
• The expenses claimed under an Umbrella should not prevent the proper operation of National Minimum Wage