Should I choose an umbrella or PAYE payroll method as a supply teacher?

Should I choose an umbrella or PAYE payroll method as a supply teacher

Navigating the world of supply teaching can be a confusing task.

From dealing with new students, being clued up on individual school rules, and creating an array of engaging lesson plans for fresh new faces poses an exciting, but challenging concept for teaching staff.

But there’s one thing that continues to confuse supply teachers across the board, and that’s their pay.

Understanding your pay as a supply teacher or teaching assistant

In most situations, you will connect with an agency to secure your next relevant role, and this brings with it new contracts and rates of pay.

This means that an agency will pay you directly, as opposed to your new school, allowing them to deduct all their relevant commission charges following your successful placement in the role.

But, did you know there are also different payroll methods that an agency can use to pay their supply teachers?

What are the most common agency payroll options?

There are a number of different reasons as to why an agency will choose a certain payroll method, but the most common options are through an ‘umbrella company’ or via PAYE (Pay As You Earn).

As the nature of a supply teacher means potentially working under a number of different employers throughout the tax year, this can often cause difficulty for HMRC.

Particularly if you see yourself temping for teacher sick days or staff shortages, you may be working for multiple employers at different rates of pay each month, making tax calculations a headache.

Some agencies continue to use PAYE as its preferred payroll method, where your relevant tax contributions will be deducted from your wages before receiving your payment.

The other payroll method that is often adopted by supply agencies is payment through an umbrella company.

How does payroll via an umbrella company impact supply teachers?

The umbrella company, being separate from your supply agency, acts as your employer in regards to your pay.

The main reason for an agency deciding to use a separate umbrella company is typically due to tax reasons. 

This type of contract does also allow for you to receive the same rights as any other employed party, including:

  • receiving holiday pay
  • being entitled to pension contributions
  • and the right to minimum wage

Payroll under an umbrella company also makes it easier for HMRC to calculate tax contributions, where you would be employed via a ‘continuous payroll link’. 

This means that you will not be placed under an emergency tax code when you secure a new contract, allowing you to be in a fixed tax band and not penalised via additional deductions.

Asking the right questions before accepting a contract

When choosing a supply agency to partner with, it’s important that a supply teacher discusses its chosen payroll method ahead of joining, as this can have an impact on the wage they take home.

Umbrella companies do offer different ‘deals’ when it comes to payroll, so it’s important to do your homework on each company before agreeing to any contract. 

And, in some cases, supply teachers can actually be worse off financially through being on an umbrella contract, unless their day rate is substantially higher to cover any fees or tax deductions.

At Teacher’s First, we offer a unique payroll solution that allows agencies to ensure teaching staff are paid correctly, on time and exactly what they deserve.

By offering both PAYE and umbrella payroll schemes, every agency can decide on a solution that works best for them and their teachers. 

On top of this, Teacher’s First provides you with access to additional benefits such as:

  • access to an online doctor
  • support through a range of wellbeing services
  • discount shopping and entertainment vouchers for popular high street stores
  •  and other valuable resources and courses

To make sure you’re clued up on the differences between umbrella companies and PAYE payroll methods, be sure to check out the NASUWT, The Teacher’s Union, to understand your rights.

And if you’d like to find out more about the Teacher’s First approach to payroll practices, and how we work with agencies to support supply teachers, please visit our website.