As the tax year draws to a close, umbrella workers should take time to review their pay, deductions and records. While your umbrella company manages payroll and applies PAYE on your behalf, you are still responsible for ensuring everything is accurate.
A simple year-end review can help you spot tax code issues, reclaim unpaid holiday, and correct errors before they become bigger problems. This year-end compliance checklist for umbrella workers explains what to look for and why it matters.
Why a Year-End Review Is Important
Umbrella workers are employees of their umbrella company. Income Tax and National Insurance are deducted through PAYE, which removes much of the administrative burden associated with contracting.
However, changes throughout the year can affect your pay and tax position. You may have switched assignments, changed umbrella companies, been placed on an emergency tax code, opted in or out of a pension, or claimed expenses.
If you are considering changing providers for the new tax year, our guide to the Top 10 Umbrella Companies compares leading options and what to look for.
Without reviewing your records, small discrepancies can go unnoticed. A proactive check ensures you remain compliant and financially protected.
If you are new to umbrella employment, our guide on How Umbrella Companies Work explains the structure in more detail.
Reviewing Your Payslips
Start by gathering your payslips for the full tax year. Look at how your assignment rate has been processed and confirm that the figures are consistent.
Your payslip should clearly show gross pay, employer’s National Insurance, employee National Insurance, Income Tax deductions, holiday pay and pension contributions. If anything looks unusual or inconsistent, raise it with your umbrella company promptly.
Many contractors misunderstand how the assignment rate converts into taxable pay. If you are unsure, our article on Understanding Your Umbrella Payslip provides a clear breakdown.
Checking Your Tax Code
Your tax code directly affects how much Income Tax you pay. An incorrect code can lead to overpayment or an unexpected bill later.
Log into your Personal Tax Account with HM Revenue and Customs and confirm that your tax code and estimated income are correct. Pay particular attention if you changed umbrella companies during the year or were temporarily placed on an emergency tax code.
Only HMRC can officially change your tax code. If something is wrong, contact them directly so the correct code can be issued to your umbrella employer.
Confirming Your P60 Details
If you remain employed by your umbrella company at the end of the tax year, you will receive a P60. This document summarises your total pay and deductions for the year.
When you receive your P60, compare it with your final payslip for the tax year. The totals should match. Keep this document safe, as lenders and financial institutions often request it as proof of income.
Reviewing Holiday Pay
Holiday pay is one of the most common areas of confusion for umbrella workers. Depending on your provider, it may be accrued and held back until requested, or advanced and included in your weekly pay.
At year-end, confirm which model applies to you and check whether you have any accrued holiday remaining. Some umbrella companies require you to request payment before a deadline.
If you are unsure how your holiday pay is handled, our guide on Umbrella Company Holiday Pay Explained outlines the key differences.
Looking at Expenses
Expense rules for umbrella workers have tightened significantly. In most cases, workers who are subject to supervision, direction or control cannot claim tax relief on travel and subsistence.
Review any expenses processed during the year and make sure you have supporting receipts. If you are unclear about what is allowable, refer to our Umbrella Company Expenses Guide for up-to-date information.
Incorrect expense claims can lead to tax corrections later, so it is important to be confident that everything is compliant.
Checking Pension Contributions
Most umbrella employees are automatically enrolled into a workplace pension unless they opt out. Review your payslips and log into your pension provider’s portal to confirm that contributions have been deducted and allocated correctly.
If you opted out during the year, make sure deductions stopped when expected. Pension discrepancies are easier to fix when identified early.
Considering Whether Self Assessment Applies
Most umbrella workers paid solely through PAYE do not need to complete a Self Assessment tax return. However, this can change if you earned over £100,000, received rental income, dividends or other untaxed income.
If you are unsure whether you need to file, check directly with HM Revenue and Customs. Registering early avoids late filing penalties.
Keeping Your Records Organised
Good record keeping is one of the simplest ways to stay compliant. Retain copies of payslips, your P60, expense receipts, pension statements and contracts. Digital copies are usually sufficient as long as they are clear and secure.
HMRC can request information going back several years, so keeping everything organised protects you in the long term.
Staying Proactive
Working through an umbrella company removes much of the administrative burden of contracting, but it does not remove responsibility entirely.
Taking time to complete a year-end compliance checklist ensures your tax, pay and deductions are accurate before the new tax year begins. It also gives you confidence that you are meeting your obligations as an umbrella employee.
A short review now can prevent unnecessary stress later.
