Umbrella vs Agency PAYE Calculator
Compare your estimated take-home pay as a contractor under an Umbrella Company vs. direct Agency PAYE in the UK.
Understanding the Difference
☂️ Umbrella Company PAYE
- You become an employee of the Umbrella company.
- They handle invoicing the agency/client.
- Deductions include: Income Tax, Employee NI, Employer NI, Employer Pension, Apprenticeship Levy (sometimes), and the Umbrella Margin.
- Holiday pay might be rolled-up into the rate or accrued separately.
- Offers continuity of employment but often results in lower take-home pay due to employer costs being passed on.
🏢 Agency PAYE
- You become an employee of the Recruitment Agency.
- The agency handles your payroll like a regular employee.
- Deductions include: Income Tax, Employee NI.
- Employer NI and Employer Pension contributions are paid by the agency, not deducted from your pay.
- You are entitled to statutory rights like holiday pay and sick pay.
- Generally results in higher take-home pay for the same gross rate compared to Umbrella.
This calculator provides estimates based on standard UK tax rules (England/NI/Wales) and assumes a standard tax code (1257L unless changed).
It simplifies some aspects like holiday pay calculation and pension qualifying earnings.
Always seek professional financial advice for your specific circumstances.
Frequently Asked Questions
- What is an Umbrella vs Agency PAYE Calculator?
- An Umbrella vs Agency PAYE Calculator is a tool designed to help contractors compare their potential take-home pay when working through an umbrella company versus being paid directly via an agency's PAYE system. It breaks down deductions such as tax, National Insurance, pension, and umbrella fees to highlight the real differences.
- Who should use the Umbrella vs Agency PAYE Calculator?
- This calculator is ideal for contractors, freelancers, and temporary workers who want to understand which payment model — umbrella company or agency PAYE — will give them the best net income based on their contract rate.
- What deductions does the calculator show for umbrella company PAYE?
- The calculator includes income tax, employee and employer National Insurance contributions (including any that are passed on to the worker), employer pension contributions, holiday pay (if rolled up), and the umbrella company’s weekly or monthly margin.
- What deductions are included for agency PAYE?
- For agency PAYE, the calculator includes income tax and employee National Insurance. Employer NI is typically covered by the agency and not deducted from your pay, and there are no umbrella fees to consider.
- Does the calculator show take-home pay for both models?
- Yes, it provides a side-by-side comparison of your gross contract rate, all deductions, and the final take-home pay under both umbrella PAYE and agency PAYE, helping you make an informed decision.
- Does the calculator account for hidden costs in umbrella PAYE?
- Absolutely. The calculator highlights hidden costs such as employer NI and pension contributions that are often passed to the worker in umbrella arrangements. These costs can significantly reduce your net pay.
- Can the calculator include pension contributions or student loans?
- Yes, the calculator allows optional inputs such as pension contributions (auto-enrolment or salary sacrifice) and student loan repayments, giving you a more accurate picture of your net income.
- Is holiday pay included in the umbrella calculation?
- Yes, if holiday pay is 'rolled up' in your umbrella rate, the calculator factors this in and displays it clearly. This helps avoid confusion about what is actually being paid versus what you’re entitled to.
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