Umbrella company payslips can look very different from a standard payslip, because they show both the money received from your agency and the deductions made before and after your gross salary is calculated. Here’s how to read yours.
1. Assignment income
This is the total amount the umbrella received from your agency or client for the hours you worked, based on your assignment rate. Some umbrellas call it “company income” or “invoice value”. It is not your salary.
2. Employment costs deducted from assignment income
Before your gross pay is calculated, the umbrella deducts the costs of employing you. These normally include:
- Employer’s National Insurance — the contribution every employer must pay on employees’ earnings above the threshold.
- Apprenticeship Levy — where applicable to the employer.
- Employer pension contribution — the employer’s share of your workplace pension.
- Umbrella margin — the umbrella’s fee, which should be a fixed, clearly stated amount.
3. Gross pay
What remains is your gross pay. This includes your basic pay and your holiday pay. For workers with irregular hours, holiday pay may be “rolled up” and paid with each salary payment, in which case it should be shown as a separate line.
4. Employee deductions
Your usual employee deductions are then taken from your gross pay:
- Income tax (PAYE), based on your tax code
- Employee National Insurance
- Your pension contribution
- Student loan repayments, if applicable
5. Net pay
Your net pay is the amount paid into your bank account. It should match the payment you receive, and there should be only one payment for each pay period from your umbrella.
How to check your payslip is correct
- Check your tax code and National Insurance number are correct.
- Make sure the margin matches what you were told at the start.
- Compare the payslip with the pay illustration you received when you joined.
- Check that your pay and tax appear in your HMRC personal tax account under your umbrella’s name.
- Be wary of any lines described as loans, advances, bonuses or “non-taxable” payments.
If anything on your payslip doesn’t make sense, ask your umbrella to explain it. At My Pay Day, our contractor support team is always happy to walk you through your payslip line by line.
Need help?
My Pay Day Umbrella provides fully compliant PAYE umbrella payroll for UK contractors and recruitment agencies, with same-day payments and insurance included. Email hello@mypaydayumbrella.com or visit our contact page to get started.
This article is general information, not tax or legal advice. Rules and thresholds can change, so check the latest guidance on GOV.UK or speak to a qualified adviser about your circumstances.
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