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It's a common misconception that umbrella workers have to pay this. The liability for Employers' National Insurance Contributions (NIC) always remains with the UK employer.

All UK employers have to pay Employers NIC, and an Umbrella Company is no different. We have to pay Employers NIC on the income we receive as part of the work you do. Ideally, the rate you are offered to work through an Umbrella Company should be uplifted to account for the umbrella’s employment costs. Many recruitment businesses that understand how the umbrella supply chain works, do provide this uplift so that the umbrella contractor is paid at least comparably to, or more than, a permanent staff member at the end client.

This therefore needs to be taken into consideration when negotiating your pay rate with the agency or end client. Please bear in mind that if you were to accept a contract paying the same rate as when you were a permanent member of staff, you would actually take home less money because of the employment costs (including Apprenticeship Levy, and Holiday Pay amongst other things) that the Umbrella Company has to now account for.

Employer’s NIC is calculated at 13.8% on earnings above £156 per week and is uncapped so, not taking into account any expenses or the margin that the Umbrella Company retains, this is the minimum uplift you would need on a permanent rate to achieve a similar net pay. As an example of this; you would need to negotiate £28.45 as the minimum hourly contractor rate to take home a similar net pay as a permanent member of staff earning £25.00 per hour.

You may be offered two different rates, one to be paid directly through the company’s payroll and another, higher rate, to have your pay processed through an Umbrella Company. The lower rate will apply if you opt to be paid directly by the company because they themselves will be liable for the Employer’s NIC. The higher rate is offered if you are being paid through an Umbrella Company because they are liable to pay the contribution. Provided the difference between the two rates is greater than 13.8%, you will be better off through an Umbrella Company.

As an aside, if you are found to be “inside-IR35”, your net pay through your Limited Company won’t be too dissimilar to that of an Umbrella Company because the same deductions for tax and NI contributions will be made. If you do fall inside of IR35, we would recommend using Contractor Umbrella to process your payments because the additional workload involved in running your own business outweighs the minimal financial gains.

Please do not hesitate to contact Sophie on 01206 591 000 or email

For an accurate estimate of your net pay after all deductions please visit our PAYE take home pay calculator.

We have over 20 years experience, have won numerous awards and have helped tens of thousands of contractors. Our friendly, professional contract managers are experts in their field, so no matter the question, we’re sure we can help you.

Signing up couldn’t be easier – just click ‘sign up‘, provide us with some basic details and within 24 hours your online employment file will be activated. We’ll also send you a comprehensive and straightforward employee starter pack and you will be contacted by your personal Contract Manager.

Why Choose Contractor Umbrella?

Contractor Umbrella is the hassle-free, straight talking umbrella company that provides umbrella employment for UK based contractors and freelancers. Independently voted as the best umbrella company by the readers of Contractor UK.

As one of the most trusted umbrella companies in the UK, we guarantee our employees peace of mind, absolute compliance and complete security. We are one of the longest standing and most respected umbrella companies in the UK.

If you’d like to find out more, call us on 01206 591 000 or request a call back by completing our online form.

Benefits of working through Contractor Umbrella;

  • Fast and easy registration –  be ready to work in 24 hours, simply register online and we’ll take care of the rest.
  • Calculate your take home pay – use our online calculator to find out how much you could be taking home through Contractor Umbrella.
  • Same day payments – We offer same day payments as standard providing funds are received into our account by 9am, for no additional fee.
  • Our Service Guarantee – is our guarantee that you will be looked after at every step of the way.
  • Flexible Limited Company accountancy – when you sign up to our sister company Dolan Accountancy, you can transfer to Contractor Umbrella when umbrella employment better suits or your assignment sits inside IR35.
  • Employee Benefits at Contractor Umbrella there are many benefits available to you as our employee including Childcare Vouchers, our Employee Rewards Scheme, Group Pension Scheme, Foreign Currency Exchange, Contractor Accommodation, Contractor Mortgages and much more.
  • Expert Contractor Support Team – Every employee of Contractor Umbrella has access to our expert Contractor Support Team who are available to deal with any queries that you may have. You can get in touch with the Contractor Support Team, through the online chat, by email or by telephone.
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