Umbrella company and agency payslips: what it puts on your payslip

The published figures

What it puts on, or takes off, the payslip

Assignment rate

The rate the agency pays your umbrella for your hours. Also called the uplifted rate, the umbrella rate, the day rate or the limited rate. It is the number you were recruited on and it is not your gross pay. It often does not appear on the payslip at all. It belongs on the Key Information Document and on the reconciliation statement, and if you cannot see it on either, ask for it.

Employer National Insurance

Your umbrella's own Class 1 liability on your earnings, at 15% above the point where it starts, taken out of the assignment rate before your gross pay exists. A directly employed person never sees this on a payslip. Their employer owes exactly the same amount and simply pays it. Correct here is an amount that tracks your earnings for the period, not a flat percentage of the whole assignment rate.

Apprenticeship Levy

0.5% of the umbrella's pay bill, again funded from the assignment rate. It is an employer tax on the employer's total wage bill, so it has no natural per-worker figure at all. A small umbrella whose pay bill is under £3 million owes none of it and should not be deducting for it. This is the second line no directly employed person will ever find on a payslip.

Umbrella margin

The umbrella's fee for processing your pay, usually a fixed amount per pay period rather than a percentage. HMRC is explicit that the margin does not contribute to your tax or National Insurance. It should be one figure, once, and it should match the figure on your Key Information Document. HMRC asks umbrellas to be clear where a low opening margin rises later.

Gross taxable pay

What is left of the assignment rate after the employment costs above. This is the figure your tax code is applied to and the figure that appears as gross on the payslip. It is the source of most of the confusion on this page, because the reader is looking at gross pay and thinking of the rate they agreed. Your gross pay must still be at least the minimum wage for every hour you worked.

Holiday pay, accrued

Held back by the umbrella and paid to you when you take leave, or worked out over a 52 week reference period. For irregular hours and part-year workers, regulation 15B of the Working Time Regulations 1998 sets the accrual at 12.07% of the hours worked in the period. It is part of your gross pay when it is paid, not an employer cost taken before gross: HMRC's example payslip adds £84.16 of holiday pay to £698.93 of basic pay to reach a gross figure of £783.09, and tax and National Insurance are charged on the whole £783.09. If this is your arrangement, the payslip or the reconciliation statement should show a running balance, and you should be able to say what it is.

Holiday pay, rolled up

Paid with every payslip instead of being held back, at 12.07%, and available only for irregular hours and part-year workers, for leave years beginning on or after 1 April 2024. It must be clearly marked as a separate item on each payslip. Rolled up and not itemised is not rolled up at all, it is missing.

PAYE income tax

Worked out on your gross pay against your tax code, exactly as for any other employee. This part of an umbrella payslip is ordinary. What is not ordinary is how often the code is wrong, because starting and ending assignments generates starter and leaver events faster than HMRC can issue a settled code.

Employee National Insurance

Your own Class 1 contribution, on your gross pay, at the published employee rates. It is a different line from the employer contribution higher up, for a different amount, and the two are not alternatives. Seeing both is correct. Being charged the employer one twice is not.

Pension and net pay

The umbrella is your employer for auto-enrolment, so it must enrol you and make the employer contribution, which it funds from the assignment rate in the same way as the other employment costs. Your own contribution comes off gross pay and shows as a deduction. Net pay is the last line, and it should match the amount that reaches your bank to the penny.

What goes wrong

Taking the assignment rate as your salary

The single most expensive misreading on this page. You compare an umbrella assignment rate against a permanent salary, or against a rate from an agency that quoted you a PAYE rate instead, and the two are not the same kind of number. Convert before you compare: ask for the minimum gross pay figure on the Key Information Document, which is the assignment rate after the employment costs, and compare that.

Rolled-up holiday pay that is never named on the payslip

You are told your rate includes holiday pay, and no line on the payslip says so. The rule for leave years beginning on or after 1 April 2024 is that rolled-up holiday pay must be clearly marked as a separate item on each payslip. If no line names it, you cannot tell whether it was paid, and neither can anyone helping you. The itemisation is the umbrella's obligation for every period, including the ones already paid, so a restated set of payslips is what compliance looks like here.

Accrued holiday pay that never comes back

Your holiday pay is held back rather than rolled up, you never get round to booking leave, the assignment ends, and the balance is not paid. Untaken statutory leave must be paid for when you leave a job. Ask for the accrual balance in writing while the assignment is still running, not after it ends, and keep the reconciliation statements that show it building up.

The margin taken twice

The margin is deducted once from the assignment rate as an employment cost, and then again as a deduction from gross pay further down the same payslip. It looks like two different lines because the wording differs, often fee in one place and administration charge in the other. Put the reconciliation statement beside the payslip and count how many times the same figure leaves.

An emergency code running for months across assignments

Each new assignment can generate another starter record, and a code on a week 1 or month 1 basis treats every period as the first of the year, so no overpayment ever corrects itself. Two or three assignments into a year this is routine and it can run until April. Check the code on the payslip against your HMRC personal tax account rather than waiting for payroll to notice.

Expenses reimbursed free of tax that do not qualify

Since 6 April 2016, section 339A of ITEPA 2003 treats each engagement through an employment intermediary as a separate employment for travel and subsistence, so each site you attend is likely to be a permanent workplace and the journey to it ordinary commuting. The relief survives only where the way you provide your services is not subject to supervision, direction or control, or the right of it. An umbrella that pays home-to-site travel free of tax anyway is building a liability in your name. The warning sign is a payslip where part of your pay is reclassified as expenses with no receipts and no business journey.

No Status Determination Statement where the client is in scope

If the client is a public authority, or a medium or large private organisation, it must make a status determination and pass on a Status Determination Statement with its reasons. Being put straight onto an umbrella and told the role is inside IR35, with no statement and no reasons, is not a determination. Until the client meets the requirements, the responsibility for deducting tax and National Insurance sits with the client.

What to check on your next payslip

• Regulation 13A of the Conduct Regulations requires the agency to give you a Key Information Document before it obtains your agreement to the terms. It has been required since 6 April 2020. It must name who employs you and who pays you, the rate, the pay intervals, every deduction and fee, holiday entitlement, and a representative example running from gross to net. Where an intermediary pays you it must also show the rate the intermediary receives and explain any difference between the two rates that the disclosed deductions do not account for. Most workers have never been given one, and a copy kept now is the only version that cannot be revised later.
• The Key Information Document and a real payslip describe the same chain, so they reconcile line by line or one of them is wrong. The representative example is the only place you will see the whole chain written down by the party that set it up. Two figures decide everything: the assignment rate at the top and the minimum gross pay at the bottom. If your payslip's gross is below the document's figure, or a deduction appears that the document never mentioned, you have a specific question to ask rather than a feeling that something is off.
• The reconciliation statement, not the payslip, is the document that shows how the assignment rate became your gross pay. HMRC's good-practice guidance asks umbrellas to provide one showing how they got from the assignment rate they received to your gross and net pay. The payslip alone cannot show you that, because the payslip starts at gross. Without the statement the employer costs are invisible and unauditable, and the umbrella is the only party that holds it.
• There are two lawful holiday pay arrangements and the payslip has to say which one you are on. Rolled up means 12.07% paid every period and marked as a separate item, and is only available for irregular hours and part-year workers. Accrued means held back and paid when you take leave. Either way it is part of your gross pay when it is paid, not an employer cost. If you cannot tell which one you are on from the payslip, you cannot tell whether you have been paid.
• Your HMRC personal tax account holds the code HMRC issued, and the payslip holds the code the umbrella applied; an assignment change is when the two come apart. Assignment churn is what breaks tax codes, and a week 1 or month 1 basis will not self-correct. Catching it in month two costs you one phone call. Catching it in March means waiting for a reconciliation after the tax year ends.
• The net pay figure on the payslip and the amount that reached your bank are supposed to be the same number. HMRC's Spotlight 60 names the gap as the plainest sign of a disguised remuneration arrangement: the net pay on the payslip is less than what you received, or the money arrives as two payments from two entities. You have a right to an itemised pay statement giving gross, every deduction and its purpose, and net, under section 8 of the Employment Rights Act 1996. Money outside that statement is the thing to ask about.
• Section 61T of ITEPA 2003 gives you a route to challenge a Status Determination Statement, and the client has 45 calendar days to answer representations you make in writing. The client must either confirm the statement with reasons or withdraw it and issue a new one. If the client does not run the process properly, the deduction of tax and National Insurance and payment of the Apprenticeship Levy transfer to the client, so the deadline is worth dating from the day your representations arrive.

The 3 occupations this reaches, and how

Each line is specific to that trade. Where a scheme depends on how you are engaged rather than on the work itself, the line says so.

Broadcast Engineer

Broadcast engineering is booked by the production rather than by the year, so one person can pass through three payrolls in a season, and the registry records that agency and production-payroll contracts for this role often fall inside IR35. That determination is the thing that changes your payslip. Inside, the fee-payer or the umbrella withholds tax and National Insurance before you are paid and you get a payslip with employer costs above the gross line. Outside, on the next production, the same work is invoiced gross by your own company and there is no payslip at all. Compare the Status Determination Statement for each production, not the day rates.

CAD Technician

Drawing offices cover workload peaks with agency technicians, and the registry names an agency spell as one of the two routes into a salaried CAD post. The salaried state is the norm for this role, so the employer costs above the gross line apply only while you are actually agency-supplied and stop the day you go permanent. The registry also names the specific casualty of that switch, which is a wrong or emergency tax code carried from the agency payroll into the first salaried payslip, so check the code on the first one rather than the net figure.

Sound Engineer

The registry records most sound engineers as freelance across live, studio and post work, with no standard payslip and self-assessment instead, and staff engineers on ordinary PAYE. This mechanic reaches neither of those. It reaches the middle case the registry also names, a touring or broadcast booking routed through an agency and paid by an umbrella, where you receive a payslip for the first time in months and the hourly figure printed on it is visibly lower than the rate you negotiated with the production.

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