What is PAYE+?
Bar2 PAYE+ is an outsourced payroll solution tailored for end clients and recruitment agencies and acts as a standard PAYE payment model for contractors.
The product allows contractors to be employed on a Contract of Employment through Bar2 PAYE+ and they are therefore simply paid their quoted PAYE rate, agreed by the recruitment agency or end client.
Benefits of PAYE+ for recruitment agencies and end clients:
- Employment costs are agreed and managed separately between the recruitment agency and Bar2 - this is completed prior to onboarding so that contractors receive a straightforward payslip with no confusing deductions
- Supply chain compliance - End clients and recruitment agencies benefit from full supply chain compliance (e.g IR35, good working plan and the Criminal Finance Act to name a few)
- Save time on admin - As contractors are employed through Bar2, we take control of all administrative tasks that come with running an in-house PAYE
- IR35 - We relieve your business of the administrative and financial burden of IR35 and ensure full IR35 exemption
- Simple and transparent - for end clients, recruitment agencies, and contractors
- Cost-effective - Our expert team will manage and process your contingent workforce payroll, leaving time to do what you do best!
- Boost contractor satisfaction and retention - contractors are satisfied that their employment status and pay are clear
Benefits of PAYE+ for contractors:
- Straightforward payslips - Contractors receive a simple payslip with no confusing deductions.
- No hidden costs - Standard PAYE deductions and no margin
- Clear pay rate - contractors receive gross rate advertised for the temp role
- Statutory benefits - Contractors employed via Bar2 PAYE+ benefit from the same statutory benefits as PAYE workers (maternity, paternity, SSP and pension)
- Fully insured - included with for PI, PL, EL insurances – no margin
- Dedicated support team - including individual Account Manager
- Expenses - Where allowable, assistance recovering expenses on a Self Assessment Tax Return
- Continued employment - on all future assignments via Bar2
What is an Umbrella payroll method?
Umbrella payroll is a contractor payroll service whereby Bar2 will employ contractors directly and act as a connector between the agency/end client and the contractor.
As a contractor’s employer, we’ll take control of working out any necessary deductions for a contractor and will submit these to HMRC. This structure facilitates a streamlined approach to payroll processing, tax obligations, and administrative tasks.
Unlike traditional employment or other contracting methods, the umbrella payment method provides flexible working for contractors looking to work with multiple agencies, whilst offering contractors a solution for managing finances and a simplified and hassle-free payroll experience.
Benefits of using Umbrella Company services
Using an umbrella company for an umbrella payroll method comes with a host of advantages:
Continuous employment and easy access
No more endless P45’s and registration forms! By using an umbrella company for payroll, contractors can eliminate the hassle of switching employer with each new contract as their employment status remains employed through Bar2, regardless of the contract they're working on.
Guaranteed peace of mind
We take ownership of the payroll and compliance function within the supply chain. We ensure that all the deductions for employment taxes, personal taxes, pension contributions and fees are managed on our end …leaving you and your contractors without the stress of unexpected tax bills.
Easy and simple processes
Not only will we cover all aspects of your payroll, but the processes on you and your contractor's side will be kept simple and hassle-free.
Employee benefits
As an ‘employee’ of an umbrella company, contractors have access to certain benefits that they wouldn’t have access to as a self-employed contractor.
Perks such as statutory sick pay, maternity pay, and paternity pay offer a sense of security for any personal circumstances that may occur whilst on the job.
Reduced admin
We handle all administrative tasks, including payroll processing, tax deductions, and invoicing, minimising the administrative workload for contractors.
Tax efficient payments
Umbrella payroll companies ensure that contractors are paid in the most tax-efficient way, whilst ensuring compliance with tax regulations.
Flexibility
The umbrella payroll method allows contractors to take on short-term assignments without the need for frequent job changes, providing stability and consistency.
Professional guidance
We offer professional support and guidance, keeping contractors informed about changes in tax laws and ensuring adherence to compliance standards.
Disadvantages of Umbrella payroll:
- Contractors are reliant on communication between the agency/client and Bar2 to be paid correctly and on time
- PAYE deductions are applied so Umbrella payroll may not be as tax efficient compared to being the Director of a limited company (although many contractors are now not eligible for limited company engagements due to IR35)
- Employee benefits may not be as attractive as working in permanent role
Differences between Umbrella Payroll and PAYE+
PAYE+ and Umbrella payroll are two very similar payment methods. The main differences however between the two are that:
- For PAYE+ the employment costs are agreed outside of the PAYE rate
- For PAYE+, the employment costs are deducted from the contract rate Bar2 receives from the agency or end client before the contractor is paid their agreed pay rate (reducing pay queries from the contractor as employment costs are not deducted on the payslips any longer)
- For Umbrella payroll, the employment costs are deducted from the assignment contract rate Bar2 receives and displayed above the workers’ payslip, then the workers’ pay rate is calculated after the employment costs have been deducted
- Easy and simple payslips for contractors for PAYE+
- Umbrella workers might be eligible to claim expenses
- PAYE+ is transparent and familiar
Mini Umbrella Company warning signs
Remember, if it feels too good to be true, then it’s more than likely that it is - so always be sure to protect yourself and report any suspicious activity to HMRC.
Protect your business from financial and reputational risk - read our short blog to discover 8 Mini Umbrella Company warning signs now.
How does Umbrella Payroll work?
Our useful blog covers everything you need to know about the Umbrella payment method, including what Umbrella Payroll is, how Umbrella Payroll works and the benefits of using Umbrella Payroll services: