The UK Tax System

UK Tax regulations explained for overseas Social Workers coming to the UK.

The tax system can be difficult to understand at the best of times and at Synergy we understand how hard it can be adjusting to a new tax system, especially while you’re trying to adapt to an exciting new way of life. There are two different systems of tax in the UK – Pay As Your Earn (PAYE) and Umbrella Companies.

Pay As You Earn (PAYE)

• Operating in a similar way to the Australian, Canadian and New Zealand tax systems, PAYE is a method of collecting tax and national insurance contributions from employees as they earn their income.
• Employees are taxed at source by their employers who are then responsible for paying it to HM Revenue and
  Customs (HMRC).
• All permanent employees are taxed under the PAYE system and locum workers can usually choose to be taxed this
  way directly through their recruitment agency/employer.
• Locums have an alternative option available to them which can be more tax effective and less of administrative burden.

Umbrella Company

• Many locum workers in the UK use an Umbrella Company as a vehicle to get paid and organise their tax.
• An Umbrella Company acts as an employer to contractors who work in temporary roles.
• It helps lessen the administration of temporary work as regardless of the number of assignments worked, all
  payments are processed through one payroll system – that of the Umbrella Company.
• In addition you can potentially offset a number of tax deductible expenses such as relocation costs, work related
  travel, professional membership fees and equipment by being paid through an umbrella company.
• There can be many benefits to working through an Umbrella Company, especially if you are able to start the process prior to arriving in the UK. For more information about how to do this please contact your consultant at Synergy and they’ll help you on your way.