Umbrella Company Calculator UK (2026/27)

When you work through an umbrella company inside IR35 under Chapter 10, Part 2 of the Income Tax (Earnings and Pensions) Act 2003 (ITEPA 2003), your headline agency rate is not your gross salary. Instead, it is an assignment rate paid by the recruitment agency to your umbrella company to fund both your employment on-costs and your taxable remuneration.

The statutory deduction waterfall follows a strict legal sequence:

1. Gross Assignment Invoice: Your daily or hourly rate multiplied by the days or hours worked in the pay period.
2. Employer Secondary Class 1 National Insurance: Under the National Insurance Contributions (Secondary Class 1 Contributions) Act 2025, employers pay 15.0% on all earnings above the secondary threshold of £5,000 per year (£96.15 per week). Because sole-director and umbrella setups cannot offset the Employment Allowance against agency workers under SI 2016/344, this cost is fully funded from the contract assignment rate.
3. Apprenticeship Levy: Under Part 6 of the Finance Act 2016, large employers with an annual UK pay bill exceeding £3,000,000 must pay 0.5% on their total pay bill. Because umbrella companies employ thousands of workers, virtually all compliant umbrellas must remit this 0.5% statutory charge.
4. Umbrella Margin: The commercial fee charged by the umbrella provider for payroll administration, contract management, and insurance coverage (typically £15 to £30 per week).
5. Gross Taxable Pay: The remaining funds are allocated to your gross taxable salary and statutory holiday pay.
6. Employee PAYE Deductions: Standard employee deductions are applied, including PAYE Income Tax (20%, 40%, or 45%), Employee Class 1 NI (8% up to £50,270 and 2% thereafter), Student Loan repayments, and workplace pension contributions.