Umbrella company take-home calculator, 2026/27

How this is calculated

Your assignment rate multiplied by days and weeks worked gives the annual amount the umbrella receives from the agency or client. The umbrella first deducts its margin, a fixed fee for running your employment, National Insurance and payroll administration.

From what remains, the umbrella must pay employer's National Insurance, calculated on the amount above the secondary threshold at the standard employer rate, before arriving at your gross taxable salary. This is a key difference from a straightforward job offer, where the advertised salary is already after employer NI has been budgeted separately by the employer.

Your gross salary is then taxed exactly like any other employment income: personal allowance, basic and higher rate income tax, and employee National Insurance between the primary threshold and upper earnings limit and above it.

Why the umbrella deduction can look larger than expected

Many contractors moving from limited company or permanent employment are surprised that the assignment rate is treated as the total cost of employment, from which employer NI and the umbrella margin are both funded, rather than the assignment rate simply becoming your gross pay.

This is standard umbrella practice and reflects the reality that the umbrella is your legal employer and carries employer obligations, including the Apprenticeship Levy where applicable and, depending on the umbrella, pension auto-enrolment contributions.

Choosing and checking an umbrella company

Reputable umbrellas provide a clear breakdown showing assignment rate, margin, employer NI, gross pay and net pay, matching this structure. Be cautious of any scheme promising unusually high take-home pay, as this is a common sign of a disguised remuneration or tax avoidance arrangement that HMRC actively pursues.

Comparing margins and reading the full pay breakdown, not just the headline take-home figure, is the best way to check you are being paid correctly.

Why is my umbrella take-home pay lower than my assignment rate suggests?

Because the assignment rate has to cover the umbrella's margin and employer's National Insurance before your gross taxable salary is even calculated, on top of your own income tax and employee National Insurance, all of which reduce the figure you actually receive.

Is holiday pay included in this figure?

This calculator assumes your assignment rate already reflects your working pattern. Many umbrellas either roll holiday pay into your hourly or daily rate or accrue and pay it separately; check your specific umbrella's payslip to see which applies to you.

Do umbrella companies deduct pension contributions?

If you are auto-enrolled and do not opt out, a minimum employee pension contribution will also be deducted from your gross pay, which would reduce take-home pay slightly below the figure shown here.

Should I be suspicious of an umbrella offering much higher take-home pay?

Yes. Umbrella schemes advertising take-home pay well above the figures produced by standard PAYE calculations are often disguised remuneration schemes that HMRC treats as tax avoidance, with the worker ultimately liable for the underpaid tax.