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Why Does My Umbrella Company Payslip Look Different?

Umbrella company pay is simple once you understand it, but your pay documents can take some getting used to, particularly if you’re coming from conventional employment. In this article, we’ll look at what you can expect to see on your umbrella company payslips, and why they differ from the ones you might have received from a conventional employer.

Conventional payslips

If you’ve been employed in a conventional way in the past, you will be used to your payslips starting from your gross pay, which is the amount your employer pays you before any deductions.

You will then see deductions for PAYE tax, employee national insurance, employee pension contributions and any other statutory deductions coming out.

The remaining amount will be your net pay, which is the amount your employer pays into your bank account.

How umbrella company pay is different

An umbrella company will calculate your pay based on the amount they receive for your work and umbrella company payslips usually break down the whole calculation, so you can see how your gross pay is worked out from the amount the agency paid the umbrella.

So, rather than starting from your gross pay, umbrella company pay documents start from the amount the umbrella company receives from the agency, often called the “assignment rate”. The umbrella will then deduct their profit margin and costs, before arriving at your gross pay.

What is deducted from the assignment rate?

In the interests of transparency, most compliant umbrella companies will break down their costs, so each one is detailed separately. The exact layout will vary from one umbrella to another, but you should see separate deductions for:

  • The umbrella’s margin

  • Employer’s National Insurance

  • Apprenticeship Levy

  • Holiday pay

  • Employer pension contributions

  • Any other costs the umbrella incurs as your employer

The remaining amount after these deductions have been made will be your gross pay.

One important thing to remember is that your pay starts at the end of this process, with the gross pay figure. The deductions that were made before this point did not come out of your pay - the umbrella company is simply showing you how your pay was calculated.

Deductions from your gross pay

Once your gross pay has been calculated from the assignment rate, your payslip should look much more familiar. From here, the umbrella company will calculate your net pay in the same way any other employer would, making the familiar deductions for PAYE tax, employee National Insurance, employee pension contributions etc before arriving at your net pay, which is the amount they’ll pay into your bank account.

If you have questions about your umbrella company payslips

If everything is working as it should, you should know what to expect before your umbrella company pay you. Your pay should be explained in a Key Information Document supplied by the recruitment agency before you accept the assignment, and most compliant umbrellas will provide a detailed pay illustration before you register with them.

However, it’s important that you understand your pay so if you do have queries, you should contact your umbrella company as soon as possible. Most umbrellas will have a dedicated team for dealing with employee queries, and will make sure you have the necessary contact details.

If you have questions or if we can help in any way, please call our expert team on 01269 468 483 or email

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