Pay As You Earn (PAYE)

Everybody who has had a job with a weekly wage or monthly salary has experience of PAYE. This is where the employer deducts from your salary Income Tax, National Insurance, before handing you the remainder. Fixed term employment engagements with an end client (or with an agency) tend to be unpopular with all concerned. From a Contractor’s point of view, PAYE simply makes no sense – Tax and NI would be paid on the full earnings and the Contractor would be unable to claim travel expenses, whilst the end client (or agency) is subject to UK and European Employment Legislation.

The 1st Option view of this trading option is that:

  • It provides virtually no control beyond initially accepting the role and the protection offered by employment law
  • Earnings and taxation are fixed and inflexible, without the opportunity to claim expenses or reclaim VAT
  • Flexibility is limited to the employers’ operating practices and terms of employment
  • It’s very simple – but otherwise unrewarding.
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