Before registering with an umbrella company, it’s a great idea to request a tailored take-home pay calculation to determine how much your net pay could be for a temporary assignment. But what exactly is an umbrella company calculator, and how does it work?

What is an umbrella company calculator?

An umbrella company calculator is designed to help you understand your take-home pay when using a PAYE umbrella company for your temporary assignment. Every compliant umbrella company will process your payroll in the same way – the only deduction that will differ between providers is the margin. Therefore, before you choose an umbrella company to process your payroll, it’s important you request a take-home pay calculation to check they operate compliantly—the calculation you are presented with shows all the deductions that will be made to your pay.

How does an umbrella company calculator work?

An umbrella company calculator uses your hourly or daily rate and the hours you are expected to work to calculate your projected weekly or monthly take-home pay. The calculation will consider any pension deductions and student loan repayments, and the calculations are based on UK tax brackets, tax deductions and tax codes – unless you notify the umbrella company that you are a Scottish or Welsh taxpayer. The calculation will also include the umbrella company’s weekly or monthly margin.

What will be included in an umbrella company calculation?

The assignment rate and employment costs

The assignment rate is the total amount of money that the recruitment agency or end client sends to the umbrella company. It is also sometimes listed as company income received. The assignment rate is the rate agreed upon for the temporary assignment, including your gross rate of pay and an uplift for the employment costs.

From the assignment rate, the umbrella company will make deductions for the employment costs for the following amounts:

  • Employers National Insurance – 13.8%
  • Apprenticeship levy – 0.5%
  • Company margin – this will be the weekly or monthly amount
  • Employers’ pension deductions (if applicable) – 3%

Holiday pay is also deducted from the assignment rate; however, this deduction is paid to you each week or month alongside your normal wage. Alternatively, you can choose to accrue your holiday pay and request the payment be made to you in a lump sum at a later date.

Gross rate of pay and personal tax deductions 

An umbrella company calculation will also show your gross rate of pay – this is the amount you are due to be paid for the work you have completed that week/month (before tax deductions). The personal tax deductions that will be made to your gross rate of pay are income tax and employee National Insurance. The amount of income tax you must pay will depend on the amount you earn. The 2024/25 income tax rates are:

  • The basic tax rate of 20% is applied to earnings up to £37,700
  • The higher tax rate of 40% is applied to earnings from £37,701 to £125,140
  • The additional tax rate of 45% is applied to earnings above £125,140

Employees National Insurance rates for the 2024/25 tax year are:

  • 8% on earnings above the primary threshold of £12,570 per year to the upper earnings limit
  • 2% on earnings above the upper earnings limit of £50,270 per year

If you decide to use the umbrella company’s workplace pension scheme, employee pension deductions of 5% will be listed in this section. Student loan deductions, if applicable, will also be listed here, along with any other deductions required by law.

For more information about how an umbrella company works and the deductions you will see to your pay, please visit the government’s website. You can also use the government’s online tool to estimate how much income tax and National Insurance you should pay for the current tax year (2024/25) to give you an idea of what your take-home pay could be.

Have you tried Churchill Knight Umbrella’s instant umbrella company calculator?

We’ve developed an instant umbrella company calculator for you to discover your earning potential as an employee of Churchill Knight Umbrella. Please click here to access our instant umbrella company calculator.

You can use the sliding bar to change your rate of pay easily and discover what your take-home pay could be at different rates. Alternatively, once you have your rate of pay, you can then click on the button “request tailored calculation” to request a free, fully tailored umbrella company calculation based entirely on your circumstances.

Your actual take-home pay may differ from the figure presented by the umbrella company calculator

Although umbrella companies work hard to ensure their take-home pay calculations are as accurate as possible, it’s important to remember that these calculations are illustrative projections to indicate what your take-home pay could be each week or month. Umbrella companies cannot give you exact figures as they only receive your tax code information, information about the amount of tax you have paid in the financial year and information about your previous earnings once you register.

Churchill Knight Umbrella will always provide an accurate calculation based entirely on your circumstances

Churchill Knight Umbrella wants to ensure you receive the most accurate calculation possible, which is as close to your actual take-home pay as possible. My Digital powers our calculator and is one of the most comprehensive calculators on the market. Variables such as your contract rate, amount of hours you work, tax code, and whether you would like your illustration to include pension and student loan deductions can be changed to generate a take-home pay calculation based entirely on your circumstances and is as accurate as possible.

To request a take-home pay calculation from Churchill Knight Umbrella, please call our expert team on 01707 871622. You can also complete the short form on our website, and a team member will contact you and provide you with a tailored take-home pay calculation and information about our umbrella service.