This is something that we at Contractor Umbrella will always deliver on; every penny is accounted for and we pride ourselves on looking after both our employees and our clients, which is why we have a service guarantee to ensure everyone is taken care of every step of the way.
It’s vital that you understand how your payslips work and can see clearly how much is deducted from your pay and why. Read our Your Payslip Explained page for more information on this.
Here we take a look at some common questions in relation to your payslip:
Why are Employers NI and the Apprenticeship Levy on my Payslip?
It might come as a surprise to learn that Employers National Insurance and the Apprenticeship Levy are taxes that are included on an umbrella contractor’s payslip.
As an umbrella company contractor, you are effectively employed by your umbrella company. As an employer, both Employers NI and the Apprenticeship Levy fall on the company to pay for, but clearly, this arrangement differs from a standard permanent employer because the umbrella company is not benefitting from any of the work carried out by the contractor.
Therefore, these taxes will come from the umbrella income, before the worker’s salary is calculated.
Read our Umbrella Company Tax Explained page for more on this.
What is an Umbrella Margin?
An umbrella margin is another factor you need to be aware of when it comes to deductions on your payslip.
Like all businesses, an umbrella company needs to make a profit in order to survive, but it doesn’t necessarily charge what you may call a ‘fee’ for its services. This is because the margin is recovered from the umbrella income, and not charged directly to the worker – which would also make it liable for VAT.
Used to cover the costs of running the umbrella, the margin should only ever be what has been agreed between you and your umbrella.
Take a look at our How Much do Umbrella Companies Charge? page for more information.
How does Umbrella holiday pay work?
As an employee of your umbrella company, you are entitled to holiday pay with a minimum of 28 days (including bank holidays).
It’s usually calculated as 12.07% of your gross taxable income, and if you only work for part of the year then this will be worked out on a pro-rata basis.
As an umbrella company contractor, you will be given the choice of either receiving your holiday pay in advance or, you can accrue it ready to be paid whenever you take annual leave.
Our Umbrella Holiday Pay page will explain this all in more detail.
If you did decide to accrue your holiday pay and you were to leave your umbrella company, then this must be paid back to you.
A compliant umbrella will never keep your holiday pay, and there should never be any odd rules that prevent you from easily accessing it.
We at Contractor Umbrella ensure that we pay back every penny of unpaid holiday pay that is outstanding either at the end of the tax year or at the termination of your employment, whichever comes first.
We hope this page has answered some of your umbrella employment questions.
Take a look at our Payslip Guide Table for a complete breakdown of a Contractor Umbrella payslip.
Our team of experts are available to answer any queries you may have, so drop us a line on 01206 591 000 or email sophie.lewis@contractorumbrella.com.
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