Tax Tips For Temps & Agency Workers

Tax Tips For Temps & Agency Workers


Working for a temp agency not only provides you with an income stream but can also help tide you over if you’re in between jobs. It’s also a great way to test whether or not you will thrive in a particular working environment or a industry. But, apart from the money you’ve earned, it is also important that you ensure the right amount of tax is deducted as you can often be put on emergency tax by the employer if they are unsure of your status as a worker.

How to find out if you’re on emergency tax

You are considered a temp or agency worker if you are connected with an employment agency but work for an employer who will tell you what to do. You’re not exactly self-employed since you have a contract with the agency.

Top 5 UK Recruitment Companies for Temp Work

Agency worker rights

Just like any employee, you also have rights that are afforded to you either by the agency or the client company where you are working. These include minimum wage pay, paid holiday days, statutory sick pay, use of the workplace facilities for staff, and changes in your basic pay after 12 weeks. That is, you get paid the same amount as a permanent staff after 3 months and if your work is similar to theirs.

You also have the right to be protected from discrimination on the basis of age, disability, race, sexuality, and the like. Note holiday and sick days due to you depend on the amount of hours you work, so these will vary depending on your circumstances.

‘Pay between assignments’ contracts

If you are on this type of contract your employment agency has to pay you for the gap between jobs, but with certain conditions. With a pay between assignments contract, you will lose the opportunity to get the same pay and holiday pay as regular staff after 12 weeks. Then again, if you expect not to work for the same company for more than 12 weeks and you get paid a minimum wage or at least 50% of the highest weekly rate from your last job, then it’s all good. Provided that you are in between jobs for more than a week.

Another perk is that your agency will be responsible for searching and offering jobs to you. All you have to do is wait for the next temping job. An agency can’t end your contract either unless they pay you at least four weeks’ worth of pay.

Although there are benefits to this type of contract, there have been instances when agencies bend the rules, resulting in problems. To prevent a workless week, for example, they might invent a job for the shortest of short-term, so they won’t have to pay you in between assignments.

Tax and National Insurance (NI)

If you are under State Pension Age or are earning over a certain amount, you need to pay tax and NI contributions on your wages. The agency will take your tax and NI out of your income through the PAYE system, and then provide you with pay slips. They must provide information as to how your money was worked out. It is also the agency that will provide you with a P45 form or P60 if you stop working for them.

Why is a p60 form important? 

Avoid working for an employer who pays you cash in hand and doesn’t take off tax and National Insurance. Not only is this against the law, but you’re also deprived of your usual agency worker rights. If you have more than one job, it is important that you get the right tax codes and inform HMRC the right information.

Think you’ve overpaid via PAYE? Claim a PAYE Tax Refund or email us at 

Translate »