Page 7 - Not Always Umbrella

wEEKLY Weekly savings with PEO What to do with the weekly savings when using a PEO vs umbrella? Option 1 - Pass 100% saving of £134.16 back to the contractor SAVINGS Actual saving p/w: £0.00 Saving vs umbrella Cashflow saving p/w: £542.27 Loss vs PSC (outside IR35) Option 2 - Share the saving 50%: 50% - giving back £67.08 (or any proportion that suits) Pension (5%) Net take-home pay £130.07 £1,500.73 Taxable PAYE Tax Employee NICs £2,601.33 £844.27 £126.26 Agency Saving Contractor £61.71 -£117.65 Taxable PAYE Tax Employee NICs Pension (5%) Net take-home pay £2,534.25 £818.78 £123.92 £126.71 £1,463.84 Agency Saving Actual saving p/w: Cashflow saving p/w: Contractor £67.08 Saving vs umbrella £542.27 Loss vs PSC (outside IR35) £24.82 -£154.54 Option 3 - Keep the entire £134.16 as retained profit Taxable PAYE Tax Employee NICs Pension (5%) Net take-home pay £2,467.17 £781.22 £123.57 £123.36 £1,439.02 Agency Saving Actual saving p/w: Cashflow saving p/w: Contractor £134.16 Saving vs umbrella £542.27 Loss vs PSC (outside IR35) £0.00 -£179.36 ! Please note: If you are an organisation that cannot reclaim VAT or use invoice discounting/factoring then the cashflow savings become ACTUAL savings. As such these can be used to bring the contractor’s weekly take-home back to that of a PSC outside IR35 and beyond. They would apply to banks, financial institutions, insurance companies, charities, nursing and healthcare agencies. peoplegroupservices.com 06