After Tax Calculator
Where Your Money Goes
About the Umbrella Take Home Pay Calculator
How Umbrella Company Pay Works
Umbrella companies hire contractors on behalf of agencies. Your assignment rate goes through deductions before PAYE processing.
The Deduction Chain
- Assignment Rate (e.g., £400/day)
- Minus Umbrella Margin (typically £20-£30/week)
- Minus Employer's NI (13.8% above £9,100/year)
- Minus Apprenticeship Levy (0.5%)
- Minus Holiday Pay accrual (12.07%)
- Equals Gross Salary for PAYE
- Minus Income Tax + Employee NI = Take-Home
Why Take-Home Is Lower Than Expected
On an £88,000 assignment rate, employer's NI alone (~£10,890) plus margin (~£1,200/year) reduces effective gross to ~£75,910 before PAYE.
Umbrella vs Limited Company
Post-April 2021, inside IR35 contractors must use umbrella/PAYE. Outside IR35 may still benefit from limited company salary + dividends.
Holiday Pay Rights
28 days statutory holiday (including bank holidays). Check if your rate is inclusive or on top.
Choosing a Compliant Umbrella
Look for FCSA or Professional Passport accreditation. Avoid loan/trust schemes — HMRC actively pursues these.
Umbrella Company Red Flags and Best Practices
The umbrella company market includes both reputable operators and schemes that may put contractors at risk. Here is what every umbrella worker should know.
Warning Signs to Watch For
Be wary of umbrella companies that promise unrealistically high take-home percentages (above 80-85% of assignment rate), offer "tax-efficient" structures involving loans, trusts, or offshore payments, or charge unusually low margins (below £15/week). These often indicate non-compliant schemes that HMRC may investigate retroactively, leaving you liable for unpaid tax plus penalties and interest.
Understanding Your Payslip
A compliant umbrella payslip should clearly show: your gross assignment income, the umbrella company margin deducted, employer NI (13.8%), Apprenticeship Levy (0.5%), your resulting gross salary, income tax deducted, employee NI deducted, any pension contributions, and your net pay. If any of these lines are missing or unclear, request a detailed breakdown immediately.
Pension Auto-Enrolment
Umbrella companies must auto-enrol qualifying employees into a workplace pension (minimum 5% employee plus 3% employer contribution on qualifying earnings). You can opt out, but consider whether the employer contribution — which comes from your assignment rate regardless — is worth keeping. Many contractors opt out to maximise short-term take-home, but this means losing the employer 3% contribution entirely.
Frequently Asked Questions
Popular Salary Calculations
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