May 11, 2023

Which is for me: Umbrella or PAYE?

To put it lightly, umbrella vs PAYE can be freakin’ nightmare.

Your job is to carry on being an amazing healthcare professional, not become an overnight tax expert with the smell of HMRC hanging around if you get it wrong.

Which is why our job at Novello Healthcare is to guide you through this minefield, along with all the others in our Novello Knows series!

If you have a question you’d like answered, feel free to email us at

So without further ado, let’s get down to the nitty gritty!

Agency Nurse / Nursing Agency: Umbrella Company / PAYE

Novello Healthcare allows our members to choose whether they work as PAYE with us or through an umbrella company / third party, because we believe this is your choice to make.

However, we do take lots of steps to keep you safe from tax avoidance schemes.

All a bit confusing for you? Let’s see if we can help!

Misconception 1: Will I get paid more if I work through an umbrella company?

If something sounds too good to be true, it normally is! If an umbrella company or agency promises that you can take home up to 90% of your salary, they may be operating a tax avoidance scheme. HMRC have strict policies on tax avoidance schemes and getting involved in one of these may result in hefty fines for you if the scheme turns out not to be compliant with the rules.

An umbrella company must process PAYE and NI contributions, holiday pay and pension in the same way as an employer who pays you directly, so the take home pay will be the same. However, an umbrella company may charge you a weekly fee, whereas Novello Healthcare will process your timesheet for free!

How can Novello Healthcare help?

We have a list of approved umbrella companies within the app, that you can view in payment preferences at any time. These are also listed on our website here. We have taken these umbrella companies through a thorough onboarding process to ensure that they are compliant with HMRC rules.

We audit them every three months to ensure this is still the case, and we keep an eye on HMRC’s list of named tax avoidance schemes which is updated regularly – which you can view here.

If the umbrella company you want to use isn’t on the list, don’t worry, it may be that we haven’t yet come across this umbrella company. We are happy to audit them on your behalf and add them to our approved list for you to use as long as they are compliant. Please contact a Novello consultant to discuss further!

Misconception 2: Can I claim expenses through my umbrella company?

An umbrella company may process some expenses which they claim can be offset against your taxable earnings. However, in 2016 changes were made to travel and subsistence claims which meant umbrella workers working under supervision (most agency healthcare professionals) could no longer get tax relief for work-to-home travel. So if you’re receiving expenses relief through your agency work it is possible the umbrella company is not complying with the rules.

How can Novello Healthcare help?

We are looking forward to launching our rewards scheme in 2023, to allow our healthcare professionals to earn bonuses and discounts when working with Novello Healthcare. Watch this space!

Misconception 3: Will I get taxed more by doing agency work?

You will be taxed the same on your earnings regardless of whether you work with one or more agencies! The benefit of working with an umbrella company is that if you work with more than one agency, as long as all your agencies will allow you to use the same umbrella company, then your basic tax code can sit with that one umbrella company across all your agency work.

When working as PAYE, your basic tax code will sit with one of your agencies (normally the one you do the most work with) and this is where your personal allowance will sit. If you work with another agency you will be taxed on a different tax code and this can feel like you are being taxed more.

However, you will still receive your tax-free entitlement over the course of any given year. At the end of the year HMRC will make any adjustments should you overpay tax. You can read more about your personal allowance and tax allowances here:

How can Novello Healthcare help? 

We allow you to choose whether PAYE or umbrella is right for you, based on your own personal circumstances. The team are more than happy to help, if it all still feels a little confusing please contact us!

Novello Know is our weekly series of articles where we answer the most common questions asked by Nurses and ODPs!

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