Umbrella Company Calculator 2026/27: Work Out Your Take-Home Pay

Estimate your umbrella take-home pay

Enter your assignment rate (per day, week or year), the umbrella's margin and your expected working pattern in the calculator above. It returns an estimate of your gross taxable salary and your net take-home pay after Income Tax and National Insurance, so you can compare two umbrella offers on a like-for-like basis.

How umbrella companies work

An umbrella company employs you. When you take an assignment through an agency, the agency agrees a rate with the end client and pays that rate to the umbrella. The umbrella then becomes your employer, runs you through PAYE like any other job, and pays you a salary. You get a payslip, a P60, holiday pay and statutory rights, but you keep the freedom to move between contracts without setting up your own company.

The figure the agency quotes is the assignment rate (sometimes called the umbrella rate or the limited-company rate). This is the critical thing to understand: the assignment rate is not your salary. It is the total pot the umbrella receives, and it has to cover the umbrella's own employment costs before any salary is calculated. That gap is why a £400-a-day umbrella rate does not feel like £400 a day when it hits your bank account.

What comes out of your assignment rate

Three things are deducted from the assignment rate before your gross salary is even worked out:

• The umbrella's margin - the company's fee for running your payroll. It's usually a fixed amount per week or month (commonly somewhere around £15 to £30 a week), not a percentage. A fixed margin is the one cost that doesn't rise as your rate rises, so on a high day rate it becomes a small fraction of the total.
• Employer's National Insurance - because the umbrella is your employer, it pays employer's NI on your salary. For 2026/27 that is 15% on earnings above the £5,000 secondary threshold. In a genuine umbrella arrangement this is funded from the assignment rate, which is why the rate is set higher than a comparable permanent salary.
• The Apprenticeship Levy - large employers pay a small payroll levy, and umbrellas typically pass this cost through the assignment rate too. It's a modest amount on top of employer's NI.

What's left after those costs is your gross taxable salary. Only then are your personal deductions applied: Income Tax through PAYE, employee's National Insurance, and any pension contribution or student loan repayment. Holiday pay is usually built into the rate as well, either rolled up into each payment or held back and paid when you take leave.

The formula in plain words

Working from the assignment rate down to your take-home:

• Pot for salary and employer costs = Assignment rate − Umbrella margin
• Gross salary = the part of that pot left after Employer's NI (and the levy) are funded
• Take-home pay = Gross salary − Income Tax − Employee's NI − Pension − Student loan

Because employer's NI is itself charged on the gross salary, the umbrella has to back-solve: it works out the highest salary it can pay so that the salary plus the employer's NI on it exactly uses up the pot. Our umbrella company calculator does that back-solve for you so you don't have to.

Worked example: Marek, a project manager inside IR35

Marek takes a 46-week contract at £400 a day, working five days a week. His umbrella charges a £20-a-week margin. Here's how an annual estimate breaks down for 2026/27. (Real umbrella pay is calculated each pay period, so treat the annual figures as a close approximation.)

• Assignment income to the umbrella: £400 × 230 days = £92,000
• Less the umbrella margin: £20 × 52 weeks = £1,040
• Pot left for salary plus employer's NI: £90,960
• The umbrella back-solves a gross salary of about £79,748, leaving roughly £11,212 to fund employer's NI at 15% on earnings above £5,000

Now Marek's own deductions on that £79,748 gross salary:

• Personal Allowance: £12,570, so taxable income is £67,178
• Income Tax: 20% on the first £37,700 (£7,540) plus 40% on the remaining £29,478 (£11,791) = about £19,331
• Employee's National Insurance: 8% between £12,570 and £50,270 (£3,016) plus 2% on the £29,478 above £50,270 (£590) = about £3,606

His take-home pay is roughly £79,748 − £19,331 − £3,606 = £56,811 a year, or about £4,734 a month. So a headline £92,000 assignment income lands as around £56,800 in his pocket. That drop catches a lot of first-time umbrella contractors off guard, and it is entirely down to the employer costs the rate was supposed to cover plus normal PAYE.

A second look: comparing two umbrella quotes

Say a second umbrella offers Marek the same £400-a-day assignment but charges a £30-a-week margin instead of £20. Over 52 weeks that's an extra £520 off the pot, which after the employer NI back-solve trims his gross salary by roughly £450 and his net pay by a few hundred pounds a year. The lesson: once you've fixed the assignment rate, the only umbrella variable that changes your take-home is the margin. Compliant umbrellas all run the same PAYE sums, so a much higher quoted take-home usually means something is being done that HMRC won't like.

2026/27 rates & thresholds used by the calculator

The deductions are based on the official figures below, checked for the 2026/27 tax year. Umbrella PAYE works UK-wide, but your Income Tax bands depend on where you live: Scottish taxpayers pay Scottish rates and bands on their salary, while the Personal Allowance and National Insurance are the same across the UK.

Sources: gov.uk Income Tax rates and gov.uk guidance on working through an umbrella company. If you live in Scotland, check your bands against the relevant Scottish Budget figures, and use our Scotland tax calculator for a salary-level breakdown.

Umbrella vs limited company

If your contract is caught by IR35, an umbrella is often the simplest route: no company to run, no annual accounts, no corporation tax return, and you keep statutory rights. The downside is that an inside-IR35 umbrella salary is taxed as ordinary employment, so there's no scope to split income between salary and dividends.

Where your contract sits outside IR35, a limited company can leave you with more, because you can take a small salary plus dividends and manage the timing of what you draw. That route brings accountancy fees, filing deadlines and the dividend tax rates that rose for 2026/27, so it only pays off above a certain rate and level of admin tolerance. Run both through the numbers before you decide: our limited company tax calculator handles the corporation tax and dividend side, and the contractor calculator compares routes side by side. If you're unsure which side of the line your contract falls, the IR35 status checker is the place to start, because the IR35 decision drives everything else.

Tips to keep more of your assignment rate

• Negotiate the rate, not the umbrella. The biggest lever on your take-home is the assignment rate itself. Because the rate has to cover employer's NI and the levy, push for an uplift over what a permanent salary would be for the same work.
• Use salary sacrifice for pensions. Many umbrellas let you sacrifice salary into a pension before tax and NI, which can be efficient at higher rates. Our take-home pay calculator shows the effect of pension contributions on net pay.
• Check your tax code on the first payslip. A new umbrella often runs you on an emergency or month-1 code until HMRC catches up, which can over-deduct early on. It usually corrects itself, and any overpayment is repaid through the tax system.
• Don't double up Personal Allowances. If you run two umbrella assignments, or an umbrella plus another PAYE job, only one job gets your full Personal Allowance. The second is taxed from the first pound, which surprises people who expected the allowance to apply twice.

Common mistakes and what to watch

• Treating the assignment rate as salary. It isn't. Comparing a £400-a-day umbrella rate against a permanent salary without removing employer's NI, the levy and the margin gives a misleadingly rosy picture.
• Falling for inflated take-home promises. If one provider quotes a take-home far above the others on the same rate, walk away. Compliant umbrellas all apply the same PAYE. Unusually high retention usually signals a disguised remuneration or loan scheme, and HMRC pursues the worker, not the promoter, for the unpaid tax.
• Forgetting holiday pay mechanics. Holiday pay comes out of your rate. Some umbrellas roll it into each payslip; others hold it back and pay it when you book leave. Know which, or you may think you're being underpaid.
• Ignoring the £100,000 trap. If your umbrella salary pushes your income over £100,000, your Personal Allowance starts to taper away at £1 lost for every £2 over, which creates a punishing effective rate on that slice of income. A pension contribution can pull you back under the line.
• Assuming Scotland and the rest of the UK are the same. Income Tax bands differ in Scotland, so two contractors on identical assignment rates can take home different amounts depending on where they live.

These figures are estimates for guidance only and not personal tax or financial advice. Your actual deductions depend on your tax code, pay frequency, pension choices and personal circumstances.

Who should use this calculator

Umbrella companies employ contractors on behalf of agencies, and the pay arithmetic confuses almost everyone the first time. The rate quoted to you is usually the assignment rate — what the agency pays the umbrella — and out of that come costs that would normally be an employer’s: employer National Insurance, the Apprenticeship Levy, holiday pay and the umbrella’s margin.

Only what remains becomes your gross salary, on which you then pay your own tax and NI. The gap between assignment rate and take-home is therefore far wider than contractors expect, and the single most useful thing to establish is whether a quoted rate is the assignment rate or your gross pay.

What this calculator assumes

• The rate entered is treated as the amount available before employment costs are deducted.
• Employer NI and the Apprenticeship Levy are met from the assignment rate, not added on top.
• Holiday pay is funded from the same rate — either rolled up or retained and paid when you take leave.
• The umbrella’s margin is deducted before your gross pay is calculated.
• Your own PAYE Income Tax and Class 1 NI then apply.

Limitations — what it does not cover

• Variation in umbrella margins, typically £15–£30 a week.
• Rolled-up versus accrued holiday pay, and unclaimed holiday pay retained by some umbrellas — ask explicitly.
• Pension auto-enrolment contributions.
• Expenses. Most umbrella contractors under supervision, direction or control cannot claim travel and subsistence.
• Non-compliant schemes. Any umbrella promising 80–90% take-home is a disguised remuneration arrangement — HMRC pursues the contractor, not the promoter.
• Whether you should be inside IR35 at all, which is a status question decided separately.

Related calculators

Compare your options with the contractor calculator for an umbrella-versus-limited overview, the IR35 status checker to confirm whether your contract is caught, and the limited company tax calculator if you're weighing up incorporating.