Umbrella Pay Calculator 2026/27

Q: How much do umbrella companies charge?

Umbrella company fees typically range from £15 to £30 per week (or £60-£120 per month). Some charge a fixed weekly fee, others a percentage of your invoice (usually around 3-5%). The fee is deducted from your gross pay before tax, so it reduces your taxable income.

Q: What deductions come out of my umbrella pay?

Your umbrella pay has several deductions: (1) Umbrella company fee, (2) Employer National Insurance contributions (13.8% on earnings above £9,100/year), (3) Apprenticeship Levy (0.5%), (4) Employee National Insurance (8% on £12,570-£50,270, 2% above), (5) Income Tax (20%/40%/45%), and (6) Pension contributions if opted in. The employer NI and levy are the key difference from standard PAYE.

Q: Is umbrella better than limited company?

It depends on your circumstances. Umbrella companies are simpler — you're an employee with no administrative burden. However, take-home pay is typically lower than a limited company because you pay employer NI and the apprenticeship levy. Limited companies can be more tax-efficient, especially outside IR35, but require more administration. Use our Sole Trader vs Limited Company calculator to compare structures.

Q: What is the Apprenticeship Levy?

The Apprenticeship Levy is a 0.5% charge on an employer's total annual pay bill above £3 million. Most umbrella companies pass this cost on to contractors. While the levy officially applies only to large employers, umbrella companies typically include it as part of their cost structure, meaning contractors effectively pay it through reduced take-home pay.

Last Updated9 May 2026 · HMRC 2026/27 rates

Calculate your contractor take-home pay through an umbrella company. Includes umbrella fee, employer NI, apprenticeship levy, employee NI, Income Tax and pension deductions.

💰 Contract Details

Day Rate

Your agreed daily contract rate charged to the end client.

Annual Contract Value

Total annual value of your contract before any deductions.

Days Worked Per Week

Typically 5 days for full-time contracts.

Weeks Worked Per Year

Allow for holidays and gaps between contracts. Typical: 44-48 weeks.

🏢 Umbrella Company

Umbrella Fee (per week)

Typical range: £15-£30 per week. Fixed fee, not a percentage.

Pension Contribution (%)

Your employee contribution. Auto-enrolment minimum is 5%.

Student Loan Plan

💰 Your Umbrella Pay Breakdown

Gross Invoice (Annual)--

Less: Umbrella Fee--

Less: Employer NI (13.8%)--

Less: Apprenticeship Levy (0.5%)--

Gross Taxable Pay--

Less: Income Tax--

Less: Employee NI--

Less: Pension--

Less: Student Loan--

Net Take-Home Pay (Annual)

Pay Retention Rate

Total Deductions

How Umbrella Company Pay Works

When you work through an umbrella company, you're technically an employee of that company. Here's how your pay flows:

Step 1: The end client pays your umbrella company your day rate
Step 2: Umbrella deducts their fee (£15-£30/week)
Step 3: Employer costs are deducted — Employer NI (13.8%) and Apprenticeship Levy (0.5%)
Step 4: The remaining amount becomes your gross taxable pay
Step 5: Employee deductions: Income Tax, Employee NI, Pension, Student Loan
Step 6: The remainder is your net take-home pay

The key difference from standard PAYE is that you pay both employer and employee National Insurance, which significantly reduces your take-home pay compared to a permanent employee on the same rate. However, umbrella is simple — there's no company admin, no Self Assessment, and you're employed with full employment rights.

Frequently Asked Questions

How much do umbrella companies charge?

Umbrella company fees typically range from £15 to £30 per week (£780-£1,560 per year), or a fixed monthly fee of £60-£120. Some umbrellas charge a percentage of your invoice (usually 3-5%) which can be more expensive for higher earners. The fee is deducted before tax, so it reduces your taxable income. Always compare fees across multiple umbrella providers.

What deductions come out of my umbrella pay?

Several deductions are taken from your umbrella pay: (1) Umbrella company fee (their charge), (2) Employer NI at 13.8% on earnings above £9,100/year, (3) Apprenticeship Levy at 0.5%, (4) Employee NI at 8% (£12,570-£50,270) and 2% (above), (5) Income Tax at 20%/40%/45%, and (6) Pension and Student Loan if applicable. The employer NI and levy are the biggest difference from standard PAYE employment.

Is umbrella better than limited company?

It depends on your situation. Umbrella pros: Simple, no admin, full employment rights, no Self Assessment, ideal for short contracts. Umbrella cons: Lower take-home pay (you pay employer NI + levy), less tax efficiency. Limited company pros: Higher take-home potential, more tax planning options. Limited company cons: More admin, accountant fees, IR35 considerations. If your contract is inside IR35, umbrella is usually the only practical option. Use our Sole Trader vs Limited Company calculator to explore structures.

What is the Apprenticeship Levy?

The Apprenticeship Levy is a 0.5% charge on an employer's pay bill above £3 million per year. While technically only large employers must pay it, most umbrella companies include this cost and pass it on to contractors. This means an additional 0.5% of your pay goes toward the levy, further reducing your take-home pay. It's one of the hidden costs of working through an umbrella company.

Can I claim expenses through an umbrella company?

Since April 2016, most umbrella workers cannot claim travel and subsistence expenses tax relief due to the "supervision, direction and control" rules. You may still be able to claim certain expenses directly through your umbrella provider, but these are limited. Contractors working through their own limited company (outside IR35) have more flexibility with expense claims.

Do I get employment rights through an umbrella company?

Yes. As an employee of the umbrella company, you're entitled to statutory employment rights including: holiday pay (5.6 weeks per year), statutory sick pay, maternity/paternity pay, and protection under employment law. This is one of the main advantages over working through a limited company, where you have no such protections. Your holiday pay is typically calculated as 12.07% of your taxable pay and is either paid weekly or accrued.

Sources & Methodology

Employer National Insurance calculated at 13.8% on earnings above the Secondary Threshold (£9,100/year for 2026/27). Apprenticeship Levy at 0.5% on pay bill. Employee NI at 8% (Basic Rate) and 2% (Higher Rate). Income Tax with tapered Personal Allowance above £100,000. Holiday pay calculated at 12.07% of taxable pay (not shown in take-home as it's typically paid separately or accrued). Calculations are for guidance — actual umbrella deductions may vary by provider.

What You Should Do Next

Compare umbrella providers — Fees vary from £15-£30/week. FCSA-accredited umbrellas meet compliance standards. Avoid providers offering unrealistic take-home promises.
Consider IR35 status — If your contract is inside IR35, umbrella may be your only option. If outside IR35, a limited company could save thousands. Check our structure comparison calculator.
Negotiate your rate — Umbrella costs reduce your take-home by ~15-25%. Negotiate a higher day rate to compensate. Use our results to justify your rate to agents.
Claim any allowable expenses — While travel/subsistence is restricted, some professional subscriptions, insurance, and equipment may still be claimable. Check with your umbrella provider.