Umbrella employees – how to work out your take-home pay

If you opt to become an employee of an umbrella company it’s important to understand what your take-home pay will be.  Before you join us, we will provide a pay illustration so you know what deductions to expect.  It’s important to be aware that the deductions will be the same whether you work for an umbrella company or via your recruitment agency’s PAYE scheme, with the exception that an umbrella company will retain an income (our margin) for the services provided.

The illustration we provide to you will be similar that detailed below, but we will of course tailor it to your agreed hourly rate and the number of hours you are contracted to work.  Here we explain what each section means.

• Company income – this is the total money earned by Crest Plus as your employer from work you have done as our employee for this period.
• Retained income – this is the amount Crest Plus are left with after the costs of employing you.
• Company costs – the items of expenditure which is deducted from company income to fund specific expenditure in relation to your employment including Employers’ National Insurance, pension contribution, holiday pay, expenses and the Apprenticeship Levy.
• Employers National Insurance – this is the amount that must be paid to HMRC. If forms part of the company costs and is funded out of the company income.
• Apprenticeship Levy – this is the amount payable to HMRC and, again, forms part of the company costs and funded out of company income.
• Employer’s pension contribution – when applicable, Crest Plus contributes to a pension scheme for you, it is funded out of the company income.
• Holiday pay – this is the amount necessary to fund any holiday pay entitlement generated by you in this period. It forms part of the company costs and is funded out of company income.  Subject to Income Tax and national insurance contributions that must be made at source, this sum is used to immediately pay you rolled up holiday pay or is accrued so that you can claim it later in the holiday year.
• Expenses – the amount of expenses claimed by you that you are entitled to be paid in this period.

As you can see, this detailed illustration serves to help you understand the various deductions which affect your take-home pay. Of course, you will need to contact us to receive an accurate pay illustration for any contract you take on.  Our expert advisers are always here to provide clarification and assistance.

Find out more about Umbrella Plus or get in touch on 01244 684700.