NO WORRIES CALCULATOR
Umbrella Pay Calculator
Have you tried our umbrella company calculator?
This take home pay calculator has been kindly provided by our Umbrella firm, No Worries Red Umbrella.
Working through an Umbrella company is something that a lot of UK contractors will have faced over the past few years especially as a result of the Off Payroll working rules that were introduced to the private sector in 2021. A large number of our accounting clients are familiar with working through an Umbrella company as some agencies/end clients require them to do so.
How to use our take Umbrella home pay calculator:
- Add your timesheet hourly or daily rate.
- Then select the number of working hours you intend to contract for each week (for each month if paid monthly).
- Then finally select your tax code, pension settings, and student loan settings.
Our Umbrella take home pay calculator will show your net take home pay and if you choose to be emailed the results you will get a breakdown that fully explains in more detail how your pay has been calculated. Our Umbrella company calculator uses all the normal payroll calculations including taking into account your tax code, the personal allowance, basic rate/higher rate/additional rate tax bands, as well as national insurance contributions. It uses tax rates for the 2022/23 tax year. Feel free to use this simple calculator as many times as you like.
Still have questions about how contracting through an umbrella company will work for you? Check out our Umbrella company or just give us a call on
0203 137 4256
A Brief Guide to Working Through an Umbrella Company
Working through an Umbrella company is vastly different to working through your own limited company. We have extensive experience in advising freelances of both options so if you have any questions feel free to get in touch with our new business team. When working through an Umbrella company you become an employee of the Umbrella. You sign an employment contract with them, and they will add you to the company payroll.
If you’re not used to working through an Umbrella company one of the biggest differences you will notice (when compared to working through your own limited company) is the vast amount of deductions that come off your payslip.
No Worries Red Umbrella it is accredited by the FCSA which gives you some comfort in knowing the service is operating compliantly. The deductions that come off your payslip are fully explained in our pay illustration email, but the easiest way to understand the deductions is that the Umbrella will take a single payment from your timesheet income (this is called the `margin`) and it is the income the Umbrella uses to run its business. Every single other deduction that comes off your timesheet income is either paid to the HMRC or is paid to the Umbrella workers personal bank account (as net pay).
Effectively Umbrella companies are giant tax collectors working free of charge for the HMRC, and with the way and employment taxes work, the contractors timesheet income has to fund employers National Insurance, the apprenticeship levy, and any employers workplace pension contribution. These deductions alone take a large chunk out of the timesheet income.
After that your income is taxed normally with deductions for PAYE, employees National Insurance, any student loan deductions, and any employees pension contributions you are making.
Umbrella vs Limited Company: Which Is Right for Contractors?
Well, this is a very interesting question! There are numerous factors to consider but it’s fair to say that the vast majority of our accounting clients prefer to work through their own limited company rather than work through an Umbrella if they can. Here are a few factors to consider and helping you decide whether an Umbrella or limited company is right for you.
(1) There is much lower admin with an Umbrella. There are no annual accounts to prepare, no corporation tax returns, very rarely any personal tax returns, and there are no dealings with VAT returns or keeping business records.
(2) However there is much less tax planning opportunities with an Umbrella. With an Umbrella all of your income is taxed through the usual payroll channel and there are limited opportunities to optimise how much tax you pay. Working through your own company provides you with many more options and puts you in greater financial control. Its not all doom and gloom though, because with an Umbrella you can still tax efficiently contribute to your pension, and also take advantage of the cycle to work scheme.
(3) IR35. If your work is caught by the Off Payroll rules then in all likelihood you will need to use an Umbrella service. There is little point in working inside of IR35 through your company (though it does suit a small number of our contractor clients).
(4) It’s very fast to get started with an Umbrella company and if your contract is for a very short duration then it makes sense to run it through an Umbrella firm rather than spending a lot of time getting your own company up and running.