Guide
Your umbrella payslip explained, line by line
Why employer costs come out of your rate, what each deduction is, and how to check you're being paid correctly.
An umbrella payslip has two halves, and the first one confuses almost everyone: deductions that come off before you even have a salary. Once you see why, it’s easy to check you’re being paid correctly. This guide walks through a typical 2026/27 payslip line by line.
An example month
| Line | Amount |
|---|---|
| Assignment income (what the agency pays) | £8,625 |
| Umbrella margin | −£96 |
| Employer National Insurance | −£1,053 |
| Apprenticeship levy | −£37 |
| Gross salary | £7,439 |
| Pension (salary sacrifice, 5%) | −£372 |
| Taxable pay | £7,067 |
| Income tax (PAYE) | −£1,779 |
| Employee National Insurance | −£309 |
| Net pay | £4,978 |
Real payslips are weekly or monthly and the amounts vary with the days you work, but every line follows the same logic. Your take-home is about 58% of the assignment income here, plus £372 a month going into your pension.
The first half: from assignment rate to gross salary
Assignment income
This is your day rate multiplied by the days on your timesheet: what the agency pays the umbrella. It’s sometimes called the “company income” or “contract income”. Check it matches your timesheets.
Umbrella margin
The umbrella’s fee for running your payroll, usually a fixed amount per week or month (£25 a week in this example). It should match what’s in your Key Information Document.
Employer National Insurance and the apprenticeship levy
The umbrella is your employer, so it owes employer NI (15% on salary above £5,000 a year) and the 0.5% apprenticeship levy. These are legally the employer’s costs, but they’re paid out of your assignment rate. That’s why umbrella rates are higher than the equivalent PAYE salary: the rate has to fund the employer’s side too.
Gross salary
What’s left after the margin, employer NI and the levy is your gross salary. The umbrella works it out so the three add up exactly: because employer NI depends on the salary, it’s solved rather than simply subtracted.
The second half: a normal payslip
From gross salary onwards, it’s exactly like any PAYE job:
- Pension by salary sacrifice comes off before tax and National Insurance, so a 5% contribution costs you much less than 5% of your take-home.
- Income tax is deducted using your tax code (usually 1257L).
- Employee National Insurance at 8% between the primary threshold and the upper earnings limit, and 2% above it.
- Student loan repayments, if you have one, also come off here (not included in this example).
Holiday pay
Most umbrellas either accrue holiday pay (holding back part of each payment and releasing it when you take leave) or roll it up into each payslip. Either way it’s funded from your rate, not added on top. Check which method yours uses, and if it’s accrued, make sure you take it.
Red flags
- Net pay well above what the calculator shows. Unusually high take-home through an umbrella is the classic sign of a tax avoidance scheme.
- Payments described as loans, “bonuses”, “expenses” or anything paid separately from the payslip.
- No Key Information Document, or deductions that don’t match it.
- An umbrella that isn’t accredited by the FCSA or Professional Passport.
If you’re weighing an umbrella against your own company, the limited company vs umbrella guide compares the two at common day rates.
This guide is general information, not financial or tax advice. Figures are estimates for England, Wales and Northern Ireland; speak to an accountant before making decisions.