Guide

PAYE, Umbrella or CIS? How You Get Paid, Explained.

Three different ways to get paid for the same day's work. Here's what actually changes between them — in plain English, not jargon.

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Why this matters

When you work through a recruitment agency, how you're paid isn't just admin in the background — it affects your take-home pay, what you're responsible for filing, and how continuous your employment record looks between assignments. Most agency work in construction, trades and utilities falls into one of three models: PAYE, umbrella, or CIS.

The three main routes

Here's the short version of each — more detail below.

PAYE — Employed directly by the agency Umbrella — Employed by a third-party umbrella company CIS — Self-employed subcontractor (construction only)

PAYE, in short

You're employed directly by the agency. Tax and National Insurance are deducted at source before you're paid, holiday pay is either built into your rate or accrued separately, and there's no extra paperwork at your end. It's the simplest option if you want zero admin, and it's common for shorter or one-off assignments.

Umbrella companies, in short

Instead of the agency employing you, an umbrella company does. They handle your tax, National Insurance and holiday pay, then invoice the agency for your time. Umbrella is common where someone moves between different agencies or assignments regularly, since it can carry a continuous employment record across contracts rather than starting fresh each time. Umbrella companies charge a margin or fee for this — always ask to see the full breakdown before you sign up with one.

CIS, in short

The Construction Industry Scheme applies to self-employed subcontractors working in construction. The contractor deducts tax at source before paying you — at a lower rate if you're registered with HMRC as a subcontractor, and a higher rate if you're not — and you handle your own National Insurance and file a self-assessment tax return. It suits people running their own business who are comfortable with that extra responsibility, including planning ahead for tax due at year end.

How to choose

There's no single right answer — it depends on how you like to work:

Want the least admin and you're taking one assignment at a time? PAYE is usually the simplest.
Moving between contracts or agencies fairly often? Umbrella can keep your employment record continuous.
Already established as a self-employed subcontractor in construction? CIS may suit — but comes with your own tax return and financial planning.

This is general information, not tax advice. Speak to HMRC or an accountant before deciding how to register, especially for CIS.

Not sure which is right for you?

We'll talk you through exactly how you'd be paid for a specific role before you commit to anything — no small print, no surprises on the first payslip.

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Getting paid, answered.

Do I have to register for CIS myself?

If you're working self-employed in construction, yes — you register as a subcontractor directly with HMRC. Contractors deduct tax at a higher rate from anyone who isn't registered, so it's worth doing before your first CIS assignment, not after.

Can I switch between PAYE and CIS?

Sometimes, but it depends on the role and how the end client has set the assignment up. Some roles are only offered one way. Ask us before you start so there are no surprises on your first payslip.

What's the difference between an umbrella company and being paid PAYE by the agency?

Both mean you're an employee with tax and National Insurance handled for you. The difference is who technically employs you — the agency directly, or an umbrella company that invoices the agency on your behalf — and how any margin or fees are structured. Always ask to see a full pay breakdown before you sign anything.

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