Indietax

Umbrella Company vs PAYE Calculator 2026/27

Updated for the 2026/27tax year · Last updated

Enter your day rate, billable days, and umbrella weekly margin to compare take-home under an umbrella company versus direct agency PAYE. The calculator shows the annual cost of the margin after tax.

Umbrella

£60,844

£5,070/month

Direct PAYE

£61,598

£5,133/month

ItemUmbrellaPAYE
Contract value£88,000£88,000
Umbrella margin− £1,300—
Income tax + NI− £25,856− £26,402
Take-home£60,844£61,598

Umbrella margin cost: £1,300/year (£25/week × 52). The umbrella handles employer NI, holiday pay accrual, and payroll — benefits not modelled here.

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How this calculator works

Umbrella take-home: the weekly margin is deducted from the contract value first. The remaining amount is treated as employment income — income tax and employee NI are applied using 2026/27 rates.

Direct PAYE: the full contract value is treated as employment income with no margin deduction. The difference between the two is the post-tax cost of the umbrella margin.

Frequently asked questions

An umbrella company employs contractors and manages payroll, NI, and tax on their behalf. The contractor's client pays the umbrella, the umbrella deducts its margin and employment costs, then pays the contractor as an employee. Umbrella companies are used when a contract is inside IR35 or when the contractor doesn't want to run their own limited company.
Umbrella margins range from around £15 to £40+ per week. Some companies charge a flat weekly fee; others take a percentage. The margin covers the umbrella's administration, employer NI processing, holiday pay accrual, and insurance.
Both are employment arrangements, but with umbrella, the agency contracts with the umbrella company rather than employing you directly. Direct PAYE means the agency employs you — no weekly margin is charged. In practice, your take-home under direct PAYE is typically slightly higher because there's no umbrella margin.
Yes. The employer NI (13.8%) and Apprenticeship Levy (0.5%) on your earnings are technically paid by the umbrella out of the contract rate — effectively reducing your gross before income tax and employee NI are applied. Some umbrellas disclose this separately; others roll it into the margin.

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