What is PAYE+?
Bar2 PAYE+ is an outsourced payroll solution tailored for end clients and agencies and acts as a standard PAYE 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 agency or end client.
Benefits of PAYE+ for agencies and end clients:
- Employment costs are agreed and managed separately between the agency and Bar2 before onboarding
- End clients and agencies benefit from the peace of mind that their supply chain is fully compliant
- As contractors are employed through Bar2, we take control of all administrative tasks that come with running an in-house PAYE
- Simple and transparent for end clients, agencies, and contractors
- Bar2 ensure full IR35 exemption
- Cost effective
Benefits of PAYE+ for contractors:
- Contractors receive a straightforward payslip with no confusing deductions
- Clear pay rate
- Contractors employed via Bar2 PAYE+ benefit from the same statutory benefits as PAYE workers (maternity, paternity, SSP and pension)
- Fully insured
- Dedicated support team at Bar2 including individual account manager
- Where allowable, assistance recovering expenses on a self-assessment
To find out further information on how Bar2 can help transform PAYE for your workers, you can visit our dedicated support page here.
What is an Umbrella payment method?
Much like PAYE+, by enrolling in our Bar2 Umbrella payment method, Bar2 will once again employ contractors directly, acting as a connector between agencies/end client and the contractor.
We take control of any necessary deductions for each contractor and ensure they are submitted prior to payment.
A contract is signed between the umbrella company and the agency or end client on behalf of the contractor being paid through the payment method.
Benefits of Bar2 Umbrella:
- Eliminates the hassle of switching employer with each new contract
- Efficient service that ensures contractors are paid accurately and on time
- No tie ins/hidden costs
- Simple and easy registration
- No headache of managing personal taxes and pension
- Processing of timesheets effortlessly and without delay
- No stress of unexpected tax bills as we handle all that for you!
- Full support team on hand
- Insurance support
- Unique and easy to use contractor portal for payslips and expense claims
- Expenses App (eligibility terms apply)
- Continuous employment record
Disadvantages of Umbrella
- Contractors are reliant on communication between the agency/client and Bar2 to be paid correctly and on time
- PAYE deductions applied so Umbrella may not be as tax efficient compared to being the Director of a limited company (although many contractors are now not eligible for Ltd Co engagements due to IR35)
- Employee benefits may not be as attractive as working in perm roles
Tax avoidance schemes
With tax avoidance schemes becoming increasingly more prevalent in the industry, it’s important to look out for the typical warning signs of these. Some umbrella companies may claim to allow contractors to keep more of their earnings than others, which is evidently a clear indication of a tax avoidance scheme. Remember if it feels too good to be true, then it’s more than likely it is, so always be sure to protect yourself and report any suspicious activity to HMRC.
Differences between Umbrella and PAYE+
PAYE+ and Umbrella 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, 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