In our latest video, we’ve outlined all the deductions that you should expect to see on your umbrella company payslip, including tax, national insurance, employment costs, pension contributions and student loan repayments. Please check it out now, and visit the Umbrella Companies YouTube Channel for more short videos about umbrella companies.
Video transcript: What should be included in an umbrella company payslip?
If you don’t have time to watch the video, but what to understand what’s included, please read the transcript below.
When you are paid by an umbrella company, you should be issued with a payslip that will outline all of the deductions that have been made to your pay. Umbrella companies will pay you in accordance with HMRC’s tax system – Pay As You Earn, or PAYE. You should expect to see the following.
Assignment rate – At the top of an umbrella payslip, you should see the amount of money the umbrella has received from your agency or end client. For example, if your assignment rate is £300 per day and you worked 5 days, this amount should be £1500.
Umbrella company margin – Your umbrella will deduct their margin from your gross rate of pay. For example, if you have agreed to use an umbrella with a £15 per week margin, you will see this deduction on each of your payslips.
Income tax – You will be subjected to income tax because you are an employee of the umbrella company.
Employee’s National Insurance – As an employee, you will see Employee’s National Insurance on your payslip.
Employment costs – You will find the employment costs on your payslip which consist of Employer’s National Insurance Contributions and the Apprenticeship Levy. The assignment rate you agreed before starting work should have taken the employment costs into consideration, and many agencies and end-clients offer temporary workers an inflated rate of pay if an umbrella company is required within the supply chain.
Pension – Your umbrella company is legally required to enrol you into a pension scheme. You can choose to opt out at a later date. Therefore, pension contributions will be shown on your payslip.
Student loan – If you are currently paying back a type 1 or type 2 student loan, you will notice deductions on your payslip – assuming you meet the criteria required to pay it back.
Holiday Pay – Holiday pay should be shown on your umbrella company payslip. Most umbrella companies will allow you to have your holiday pay paid to you in two ways – either having it processed each payment frequency, or having it accrued and paid to you at a later date. Holiday Pay is a reallocation of your own funds, meaning it is not paid on top of your assignment rate.
Personal information – Your umbrella company payslip will also include personal information, including your name, tax code, National Insurance Number. It will also include information on the amount of tax you have paid in the current tax year.
Before choosing an umbrella company, always make sure they are compliant. We recommend that you only seek the services of an umbrella company with an FCSA or Professional Passport accreditation because these businesses have undergone strict audits to ensure they operate compliantly and in the best interests of their employees.
The Umbrella Companies YouTube Channel has more videos that you might find helpful
The team has been busy collating a series of videos designed to cover the most commonly asked questions in relation to umbrella companies. Please check out the Umbrella Companies YouTube Channel now because new content is being uploaded on a regular basis. Another helpful resource is the Umbrella Company Payslip Example we have created.
Top 10 umbrella companies
If you’re on the lookout for a new umbrella company, you’ve come to the right place. We have put together a list of our top 10 umbrella companies, and they’re accredited by the Freelancer and Contractor Services Association (FCSA) or Professional Passport. Some of our top 10 umbrella companies have special offers at the moment that you won’t want to miss out on.
