Umbrella Company Take-Home Pay Calculator

Because the day rate quoted by an agency is the contract value, not your gross salary. Before you get paid PAYE, the umbrella pays employer's National Insurance (13.8%), apprenticeship levy (0.5%), holds back holiday pay, and takes their margin. Only then does the leftover become your gross salary, which is taxed as normal PAYE. On a £500/day contract the deductions typically strip 20–25% off the top before income tax is even applied.

Yes — and it's the single most common shock for new contractors. Legally, employer NI is the umbrella's liability, not yours. But the umbrella recovers it from your contract rate, so economically you pay it. Any umbrella that claims otherwise is either lying, using disguised remuneration, or unsustainable. HMRC's guidance explicitly permits this recovery.

The apprenticeship levy is 0.5% of a large employer's payroll. Umbrellas are large employers by definition (thousands of contractors), so they hit the £3m threshold and pay the levy on all pay above £166/week. Just like employer NI, this comes out of your contract rate.

Legally, umbrella workers accrue 5.6 weeks of holiday per year (12.07% of gross salary). Umbrellas either pay it 'rolled up' (added to each week's pay — this is what the calculator models), or they hold it back and pay it when you take time off. Rolled up is more common and better for cashflow, but check your contract — some umbrellas hold it and don't pay it out if you don't take leave.

For the same day rate, a limited company (Outside IR35) is typically £5,000–£20,000/year better off, mostly because dividends aren't subject to NI. Use our IR35 calculator to compare directly. Remember: you can only use a limited company if your engagement is genuinely Outside IR35 — the end client decides.

Student loan repayments (which apply to umbrella salary at 9% above the plan threshold), personal pension contributions above what you set, and the personal-allowance taper above £100k gross salary (which caps at ~£125,140 giving an effective 60% marginal rate on that slice). Set the pension % if you salary-sacrifice through the umbrella — many do, which is one of the few big tax advantages umbrella workers still have.