Umbrella Company & Inside IR35 Calculator

Umbrella companies deduct employer costs (15% employer NI, 0.5% apprenticeship levy, their margin) from the assignment rate before paying you through PAYE.

Updated 2026-10-03 · 2026/27 HMRC rates

Take-home pay (inside IR35 / umbrella)£54,472£4,539.31 a month · 62% of assignment income

Assignment income	£88,000
Employer NI	£10,607
Apprenticeship levy (0.5%)	£379
Umbrella margin	£1,300
Gross salary	£75,714
Income tax	£17,718
Employee NI	£3,525

Take-home £54,472 61.9%
Income tax £17,718 20.1%
Employee NI £3,525 4.0%
Employer NI + levy £10,986 12.5%
Margin £1,300 1.5%

Your result is ready

Key facts

The personal allowance stays at £12,570 in 2026/27 and is reduced by £1 for every £2 of adjusted net income over £100,000, so it is gone entirely at £125,140 (HMRC income tax rates and allowances).
In England, Wales and Northern Ireland, 2026/27 income tax is 20% on the first £37,700 of taxable income, 40% up to £125,140 and 45% above that (HMRC rates and thresholds for employers 2026 to 2027).
Scotland has six bands in 2026/27: 19% starter on the first £3,967 of taxable income, 20% basic to £16,956, 21% intermediate to £31,092, 42% higher to £62,430, 45% advanced to £125,140 and 48% top above that (HMRC rates and thresholds for employers 2026 to 2027).
Budget 2025 extended the freeze on income tax thresholds and the equivalent employee and self-employed National Insurance thresholds for a further three years, from April 2028 to April 2031 (HM Treasury Budget 2025).
Employees pay Class 1 National Insurance at 8% on earnings between £12,570 and £50,270 a year and 2% above that in 2026/27 (HMRC rates and thresholds for employers 2026 to 2027).
Employers pay 15% National Insurance on earnings above the £5,000 secondary threshold, and eligible employers can claim an Employment Allowance of £10,500 (HMRC rates and thresholds for employers 2026 to 2027).
Self-employed people pay Class 4 National Insurance at 6% on profits between £12,570 and £50,270 and 2% above that; voluntary Class 2 costs £3.65 a week if profits are below £7,105 (GOV.UK self-employed National Insurance rates).
Dividend tax rose by 2 percentage points from April 2026: the basic rate is now 10.75% and the higher rate 35.75%, while the additional rate stays at 39.35% and the dividend allowance stays at £500 (GOV.UK tax on dividends).

IR35 and umbrella companies

Where an umbrella day rate goes

An umbrella company is your employer for tax purposes: it receives the assignment rate from the agency, pays employer costs out of it and runs PAYE on what is left. Employer NI (15% above £5,000), the 0.5% Apprenticeship Levy and the umbrella’s margin all come out before your gross salary is set.

Example at £350 a day for 220 days, with a £25 weekly margin over 46 weeks: assignment income of £77,000 becomes a gross salary of £66,320 after £9,198 employer NI, £332 levy and £1,150 margin. Income tax of £13,960 and employee NI of £3,337 then leave £49,023, or 64% of the rate.

Day rate	Assignment income	Gross salary	Take-home	% kept
£350	£77,000	£66,320	£49,023	64%
£500	£110,000	£94,892	£65,595	60%

New PAYE rules from 6 April 2026

From 6 April 2026 the agency that contracts with the end client – or the end client itself if there is no agency – is responsible for making sure an umbrella company operates PAYE correctly. If the umbrella underpays, HMRC can recover the missing tax from the agency or client.

For workers, the umbrella is still your employer and must pay you correctly. The change is aimed at tax avoidance schemes that promised unusually high take-home pay; any umbrella offering much more than a standard PAYE calculation should be treated as a red flag.

How to check your umbrella payslip

Find the assignment rate on the payslip or key information document and check it matches what the agency agreed.
Confirm employer NI, levy and margin are shown separately and add up to the difference between assignment income and gross pay.
Look for one PAYE deduction under your tax code – payments described as loans, advances or “non-taxable” income are warning signs.
Check holiday pay is either paid when you take leave or shown clearly as rolled up, so you are not paid it twice from your own rate.
Use HMRC’s “Work out pay from an umbrella company” tool to compare.

Umbrella, limited company or inside IR35?

Inside-IR35 work for a medium or large client must be paid through PAYE, either by the agency or an umbrella. The client decides the status and issues a status determination statement. If the client is small and outside the public sector, the worker’s own company decides.

Outside IR35, a limited company can take salary and dividends, but corporation tax and dividend tax mean the gap with an umbrella is smaller than many contractors assume. Compare both with our limited company calculator using the same day rate.

Salary sacrifice into a pension through the umbrella saves income tax, employee NI and employer NI, all three of which come out of your rate, so it is one of the few ways to improve umbrella take-home.

Terms on an umbrella payslip explained

If the numbers do not reconcile – assignment income minus employer costs, margin and pension should equal gross pay – ask the umbrella for a breakdown before the next payment.

Assignment rate: what the agency pays the umbrella for your time. This is the figure the calculator starts from.
Margin: the umbrella’s fee, usually a fixed weekly or monthly amount, deducted before your salary is set.
Employer NI: 15% on gross pay above £5,000 a year.
Apprenticeship Levy: 0.5% of pay. Umbrellas with a pay bill over £3 million pay it and pass the cost on.
Holiday pay: either paid when you take leave or rolled up into each payment. Either way it comes from the assignment rate.
Gross taxable pay: the figure your income tax and employee NI are calculated on, using your tax code.

Choosing an umbrella company

Agencies now carry the risk if an umbrella underpays PAYE, so most keep a list of approved providers. Choose one that shows the full deduction chain on every payslip, operates a pension properly and has no promises of take-home pay above a normal PAYE calculation.

Compare margins on a like-for-like basis. A margin that looks low may be offset by extra charges, such as fees for faster payments.

Frequently asked questions

Why is umbrella take-home so much lower than the day rate?

Because the rate has to cover both employer and employee taxes. Typical take-home is 55%–65% of assignment income.

Is the umbrella margin tax-deductible?

It is deducted from assignment income before your salary is set, so you do not pay income tax or NI on it.

Can I claim travel expenses through an umbrella?

Not usually for inside-IR35 assignments: the off-payroll rules treat each assignment as employment, so ordinary commuting to the client is not deductible.

Who is liable if my umbrella does not pay my tax?

For payments from 6 April 2026, HMRC can recover the unpaid PAYE from the agency that contracts with the client, or from the client if no agency is involved.

Do I get statutory sick pay and holiday through an umbrella?

Yes. As an employee of the umbrella you are entitled to employment rights such as statutory sick pay, paid holiday and auto-enrolment into a pension.

Sources

Figures are taken from official government publications and were last reviewed on 2026-10-03.