Umbrella payroll calculator – work out your net income when using an umbrella payroll provider

Last checked and updated on 12 May 2022

An umbrella payroll calculator is a handy tool for UK contractors. It can help you figure out how much money you will earn through your contract work, after all fees and deductions.

In this guide, we will show you how to use an umbrella payroll calculator and explain the benefits of using one.

Read on to learn more about calculating net income as an umbrella contractor.

25 March 2022 update: we updated our calculator to reflect an announcement on 23 March by Chancellor Rishi Sunak that the employee National Insurance threshold would rise to £12,570 from the previously announced £9,880.

Contractor umbrella income calculations – working out take-home pay

An umbrella payroll company is a great way to simplify your tax obligations as a contractor. An umbrella company will deduct PAYE and National Insurance from your earnings, and then pay these taxes to HMRC on your behalf. This means that you don’t have to worry about filing a self-assessment tax return or paying any taxes yourself.

How much does an umbrella company charge in fees?

The main downside of using an umbrella company is that they will take a cut of your earnings. This can range from 7-15%, or a set monthly cost of around £100, depending on the company you use.

Why use an umbrella pay calculator?

Our umbrella payroll calculator can help you figure out how much money you will take home after the deductions have been made. It takes into account your pay rate, hours worked, and tax rates. You can also use it to compare different umbrella companies to see which one will give you the most money after deductions.

How to use an umbrella payroll calculator

To use our umbrella payroll calculator, simply enter your hourly rate. To keep it simple, we assume 40 hours worked per week, and that you have no other income streams. The calculator will then show you how much money you will take home after deductions have been made.

Important things for contractors to bear in mind

There are a few things to keep in mind when using an umbrella payroll calculator. First, the tax rates used in the calculator are based on the UK tax system. If you are contracting in another country, the tax rates will be different.

Second, the calculator assumes that you are paid monthly. If you are paid weekly or on another frequency, the amount of money you take home will be different.

Umbrella vs PAYE calculator

If you are a contractor, you have the option of setting up your own limited company or working through an umbrella company.

There are pros and cons to both options, but the main difference is how much money you take home. With an umbrella company, you will take home less money after deductions than if you set up your own limited company. However, using an umbrella company is much simpler and requires less paperwork.

So, which option is right for you? To answer this question, you need to consider your tax situation and how comfortable you are with doing your own bookkeeping. If you are confident in your ability to manage your own tax affairs, then setting up your own limited company may be the better option. However, if you would rather not deal with tax paperwork, then an umbrella company is a good choice.

Umbrella pay and IR35

If you are working through an umbrella company, you need to be aware of IR35. IR35 is a UK tax law that applies to contractors. It states that contractors who work through their own company are responsible for paying taxes on their income, even if they are hired by an agency. This means that if you are working through an umbrella company, you need to make sure that your contract is outside of IR35.

To do this, you need to look at the terms of your contract and see if it meets the criteria for an IR35- compliant contract. If it does, then you can continue working through your umbrella company. However, if it doesn’t, then you will need to either negotiate a new contract that is compliant or work through your own limited company.

Closing thoughts

In conclusion, using an umbrella payroll calculator is a great way to figure out how much money you will take home after deductions have been made. It takes into account your pay rate, hours worked, and tax rates, so you can be sure that you are getting the most accurate information.

Important – The information provided in our articles is intended to be for general purpose use only, and not advice for you or your business. We strive to publish accurate information, but encourage you to fact-check and seek expert guidance. We recommend that you always speak to a qualified professional to get advice about how to operate your business under your specific requirements and circumstances.