Umbrella take-home calculator
An umbrella quote hides how much of your rate goes on employer costs before you are even taxed. This traces every pound from the assignment rate to your bank account.
Where the assignment rate goes
| Step | Who takes it | Amount |
|---|---|---|
| Assignment income | Paid to the umbrella | £77,000 |
| Umbrella margin | The umbrella | £1,300 |
| Employer NI (15%) | HMRC, funded from your rate | £9,179 |
| Apprenticeship Levy (0.5%) | HMRC, funded from your rate | £331 |
| Your gross pay | Includes holiday pay £7,129 | £66,190 |
| Income tax | HMRC | £13,908 |
| Employee NI | HMRC | £3,334 |
| Net take-home | You | £48,948 |
How it is worked out
The number the agency quotes is the assignment rate, sometimes called the uplifted or limited company rate. It is deliberately higher than a salary because it has to cover the employer costs of putting you on a payroll. The umbrella takes its fixed margin first. What is left has to stretch across employer National Insurance at 15% on pay above the £5,000 secondary threshold, the 0.5% Apprenticeship Levy, and then your own gross pay. Only after that gross figure is set do income tax and employee National Insurance come off, exactly as they would for any employee.
Holiday pay is not a deduction, even though it looks like one on some payslips. It is 12.07% of your worked time, which is your statutory 5.6 weeks expressed as a share of the weeks you actually work. An umbrella either rolls it into each payment or holds it back until you take leave.
Worked example
Take a £350 day rate over 220 billable days, so £77,000 of assignment income. A £25-a-week margin removes £1,300. Employer NI and the levy take another £9,510, which sets your gross pay at £66,190. Income tax and employee NI of £17,243 then leave £48,948 in your account, about £4,079 a month and 63.6% of where you started.
Common questions
Why does an umbrella deduct employer National Insurance from my pay?
Because the assignment rate the agency pays the umbrella is not your salary, it is the total cost of employing you. Employer NI at 15% above the £5,000 secondary threshold, plus the 0.5% Apprenticeship Levy, are the umbrella employer costs. They come out of the assignment rate before any of it becomes your gross pay, so in practice you fund them.
Is the holiday pay an extra deduction?
No. Holiday pay is your own money. It is 12.07% of your worked hours, either paid each week (rolled up) or held back and paid when you take leave. This tool shows it inside your gross pay so you can see where it sits, not as a loss.
What is a fair umbrella margin?
The margin is the only part the umbrella actually keeps for running payroll. It is a fixed weekly or monthly fee, commonly £15 to £30 a week, not a percentage. Be wary of umbrellas that quote a percentage or bundle extra charges.
How much of a £350 day rate do I keep?
On a £350 day rate over 220 days, an umbrella leaves about £48,948 a year, roughly £4,079 a month. That is 63.6% of the £77,000 assignment income once the margin, employer NI, levy, income tax and employee NI are taken.
Would a limited company pay more?
Often yes, because a company avoids employer NI on your pay and lets you split salary and dividends. But it carries accountancy cost, more administration, and IR35 risk. Umbrella is simpler and fully PAYE. The day rate to salary tool helps you weigh it up.