Umbrella Company Calculator UK

The single biggest shock for new umbrella contractors is discovering that the rate the agency quoted is not their salary. A contractor told "£400 a day" who compares it to a £400-a-day salary is going to be disappointed by their first payslip, because an umbrella rate has to fund costs that a permanent employer pays invisibly on top of salary. Understanding the deduction chain is the difference between correctly pricing a contract and feeling ripped off every Friday.

This calculator shows your genuine take-home from an umbrella arrangement, using 2026/27 rates.

How the money flows

The client pays the agency, the agency pays the umbrella company an assignment rate, and the umbrella, as your legal employer, converts that into your pay. From the assignment rate, deductions come off in two distinct stages:

Stage 1 — employment costs (before your gross pay exists):

• Employer National Insurance — 15% on earnings above £5,000 a year for 2026/27
• Apprenticeship Levy — 0.5%, where the umbrella's total pay bill makes it liable (most sizeable umbrellas are)
• The umbrella's margin — typically a flat £15–£30 a week, this is the only part the umbrella keeps
• Employer pension contributions — 3% of qualifying earnings under auto-enrolment, unless you opt out
• Holiday pay provision — set aside from the rate (more below)

Stage 2 — your normal employee deductions (from the gross pay that remains):

• Income Tax through PAYE: £12,570 Personal Allowance, then 20% / 40% / 45% bands
• Employee NI: 8% between £1,048 and £4,189 a month, 2% above
• Employee pension contributions (typically 5% of qualifying earnings) and any student loan

Worked example

Assignment rate of £400 a day, 5 days a week (£2,000 a week):

• Employer NI: roughly £246 a week comes off the top
• Apprenticeship Levy: around £9
• Umbrella margin: say £20
• That leaves a gross pay of roughly £1,725 a week, this, not £2,000, is your actual "salary" for tax purposes
• Income Tax and employee NI then reduce it further; at this income level, take-home lands around £1,150–£1,200 a week depending on tax code, pension and student loan

So a "£2,000 a week" contract delivers roughly 58–60% of the headline as take-home, entirely legitimately. Rules of thumb of 55–65% are realistic; anything much above 65–70% should set alarm bells ringing (see below).

Holiday pay: watch this closely

As an umbrella employee you're entitled to 5.6 weeks of statutory holiday. Umbrellas handle it two ways:

• Rolled-up — 12.07% added to each payslip as a separately itemised line, paid as you go
• Accrued — held back and paid when you take leave or when you request it

The accrual model has historically been a problem area: some umbrellas quietly kept holiday pay that contractors never claimed. Check your payslip shows holiday pay explicitly, know which model you're on, and if accrued, claim it, it's your money, funded from your own rate.

Comparing umbrella vs agency PAYE vs limited company

• Agency PAYE — the agency employs you directly at a lower headline rate, but with no employment costs deducted from it. A £330 PAYE rate can net out similarly to a £400 umbrella rate, always compare like with like
• Limited company — potentially more tax-efficient for contracts outside IR35, but with admin, accountancy costs, and no employment rights. For inside-IR35 contracts, umbrella is usually the practical route

Red flags: non-compliant schemes

The umbrella sector has a persistent fringe of disguised remuneration schemes, arrangements paying part of your income as "loans", "advances", or via offshore structures to dodge tax. The pitch is always the same: unusually high take-home, "HMRC compliant", "QC approved". The reality: HMRC pursues the contractor for the unpaid tax, years later, with interest, as thousands caught by the Loan Charge discovered. If the take-home percentage sounds too good, it is. From April 2026, new rules also make agencies and end clients accountable for PAYE compliance in umbrella chains, which is expected to squeeze these schemes further, but the personal risk of joining one remains yours.

Checking an umbrella before you sign

• Ask for a full illustrative payslip at your rate, every deduction itemised
• Check the margin is a flat fee, not a percentage of your rate
• Confirm how holiday pay works and where accrued funds sit
• Look for accreditation from FCSA or SafeRec, imperfect but meaningful signals

This is general guidance, not financial advice. For choosing between umbrella and limited company working, or assessing a specific scheme, speak to a contractor accountant.