Payslip Buddy, an AI-powered umbrella payslip auditing software, has released a free and comprehensive umbrella company calculator, and we recommend our readers check it out. Please keep reading for more information, including a calculator link and some screenshots highlighting its features.
An overview of the Payslip Buddy umbrella company calculator
The Payslip Buddy umbrella company calculator (officially called Salary Calculator For Umbrella Workers) is designed to provide contractors and freelancers with an accurate take-home pay calculation based on the pay they should receive from a compliant, UK-based umbrella company. The free online calculator allows the user to enter multiple variables (explained below) which will generate a report explaining the expected total take-home pay, as well as all of the deductions that will be made by the umbrella company (taxes, National Insurance, etc.).
Compliant umbrella companies process the payroll of temporary workers in the same way – with Pay As You Earn (PAYE), the government’s tax system for employees. However, additional deductions apply to umbrella company employees compared to traditional workers in permanent employment – the employment costs (Employer’s National Insurance Contributions and the Apprenticeship Levy). The Payslip Buddy calculator gives users a detailed explanation of every deduction they should expect to see to their pay when employed by an umbrella company, and it explains each of these in detail. We have yet to find a more transparent, accurate, and thorough umbrella company calculator online.
When should the Payslip Buddy umbrella company calculator be used?
Every contractor and freelancer who uses an umbrella company (or needs to in the future) should use the Payslip Buddy calculator to understand the deductions that will occur to their assignment rate.
Why is the Payslip Buddy umbrella company calculator so good?
Its accuracy and detail make Payslip Buddy’s umbrella calculator stand out. There are so many pieces of information that contractors and freelancers can enter to get an accurate pay projection. And this tool will not just benefit temporary workers. Any stakeholder can use it to see how compliant umbrella companies should be paying their employees – and it’s extremely valuable.
Here are the pieces of information you are required to submit to Payslip Buddy’s umbrella company calculator. However, if you’re in a hurry, you can enter just the tax year and umbrella rate for a “quick estimate”.
- Tax year – Select which tax year you would like your umbrella company calculation to be based on:
- 2023/24
- 2022/23 Post 6 November
- 2022/23 Post 6 July
- 2022/23
- 2021/22
- 2020/21
- Umbrella Rate – Also referred to as the Assignment Rate, enter the amount you have agreed to complete your work for (e.g. £700 per day, or £100 per hour). You can enter rates in the following formats:
- Year
- Month
- Week
- Day
- Hour
- Employment Costs – The employment costs are deducted from the assignment rate. While often an area of contention, agencies or end-hirers should always offer an inflated rate of pay (assignment rate) when you are required to work through an umbrella company to factor in the employment costs.
- Employer Pension Contribution – You can select to opt in or out of pension contributions. When using an umbrella company, both the Employer and Employee pension contributions will be deducted from the assignment rate.
- Holiday Pay – There are two options for Holiday Pay. You can either choose to have it advanced or accrued and paid at a later date.
- Apprenticeship Levy – The apprenticeship levy is a 0.5% tax on companies with large wage bills, and it is designed to help boost apprenticeships throughout the UK. Most umbrella companies must pay the Apprenticeship Levy, which is deducted from the assignment rate. You can choose to remove the Apprenticeship Levy from your umbrella company calculation if you would prefer.
- Umbrella Costs – The only income that compliant umbrella companies generate is through the margin they deduct from the assignment rate each payment frequency (usually weekly or monthly). An umbrella margin will typically be between £15 and £30 per week. The Payslip Buddy calculator allows you to enter the margin you have been quoted by your umbrella company.
- Pay Information – You are required to enter some personal information, including your tax code, NI category number and the number of hours and day you work per week.
- Allowances and Tax Relief – There are five options for you to activate under this section:
- Blind Person Allowance:
- You claim the Blind Person’s Allowance.
- Your spouse or civil partner transferred their Blind Allowance to you.
- Marriage Allowance
- You’ve received a transfer of 10% of your partner’s Personal Allowance.
- You’ve transferred 10% of your Personal Allowance to your partner.
- Married Couple’s Allowance
- You claim the Married Couple’s Allowance.
- Pension & Student Loan – When submitting the full form on the Payslip Buddy umbrella company calculator, you need to provide:
- Information about your pension intentions with the umbrella.
- Whether you will be contributing to a private pension with salary sacrifice (an extra only offered by a handful of umbrella companies in the UK).
- Whether or not you are paying back a student loan (type 1, type 2 or a postgraduate loan).
- Blind Person Allowance:
Is it still worth asking actual umbrella companies for take-home pay calculations?
100% yes!
Before you choose an umbrella company to process your payroll, you must request a take-home pay calculation Every compliant umbrella will process your payroll in the same way, but it’s crucial you check they operate compliantly and the calculation you are presented with explains the deductions that will occur before you receive your net salary into your personal bank account.
Sadly, there are a small number of tax avoidance schemes out there targeting contractors and freelancers. These companies will not process payroll compliantly, and while they may advertise inflated pay retention, the consequences of engaging with such a company could be severe. Therefore, by requesting a take-home pay calculation before registering with an umbrella, you can check they are operating above board and that there are no signs of malpractice.
If you ever take time away from contracting and opt to use a new umbrella, or you are keen to switch to a better service provider, always request a take-home pay calculation before registering – to ensure the umbrella is ethical and compliant.
Screenshots of Payslip Buddy’s umbrella company calculator
Screenshot 1: You’re in the right place! This is the top of the Salary Calculator For Umbrella Workers (available here).
Screenshot 3: The calculator allows you to expand these sections to submit more information to generate an accurate net salary figure.
Screenshot 3: An example of the pay overview (gross pay) with the deductions (employment costs, tax and deductions).
Screenshot 4: An example of a take-home pay report.
What is Payslip Buddy?
Payslip Buddy is the B2C umbrella payslip review software for contractors and freelancers, created by SafeRec (B2B). Should you use the services of a SafeRec Certified Umbrella Company, you will be given access to Payslip Buddy – a platform that allows you to login and view detailed audit reports for every payslip you’ve been issued by your umbrella. Until now, this level of transparency had never been achieved in the umbrella payroll sector and it puts the power in your hands because you can be confident you are being paid correctly all year round.
We are huge advocates of SafeRec because it allows the entire supply chain to know for certain whether an umbrella is compliant or processing payroll dishonestly.
Quite simply, SafeRec is revolutionary, and more information can be found in our article: SafeRec Certification – the new standard shaping the future of compliance in the umbrella company sector.
Top 10 umbrella companies
Are you on the lookout for a new, compliant umbrella company? You’ve come to the right place. To help with your umbrella company search, we have create a list of our top 10 umbrella companies and they are all accredited by the Freelancer and Contractor Services Association (FCSA) or Professional Passport. Be sure to check them out quickly because some have special offers at the moment!
