For years, umbrella companies have confused the UK’s temporary workforce. And, with umbrellas experiencing demand like never before, more and more contractors, freelancers and agency workers are approaching umbrella companies for the first time. To help make life easier, Umbrella Company Calculator has launched a brand new tool designed exclusively for temporary workers. The new umbrella company calculator is a free tool that can be used an unlimited number of times. It’s designed to be transparent and provide temporary workers with an accurate and realistic take-home pay calculation. Keep reading, and we’ll explain more about Umbrella Company Calculator and why it’s worth trying out.
Our new umbrella company calculator in a nutshell
Launched in September 2021, Umbrella Company Calculator is a free-to-use online umbrella company calculator for contractors, freelancers and temporary workers in the UK. The tool’s purpose is straightforward – to provide accurate and transparent pay projections and to stop unethical umbrella companies from being able to mislead temporary workers with inaccurate and inflated figures.
Why have we built Umbrella Company Calculator?
Compliant umbrella companies are great. They provide a valuable service for UK temporary workers. And, ethical companies will hand out accurate umbrella company calculations before signing anyone up for their service. However, not every umbrella company is compliant, and many are providing contractors and freelancers with inaccurate take-home pay projections. This annoyed us so much, we decided to build a new umbrella company calculator.
Understanding umbrella company take-home pay
Our advice to temporary workers is this – don’t just shop around for the umbrella company offering you the highest take-home pay. It’s vital to understand how umbrella companies work, and how they process the pay of temporary workers. Our new umbrella company calculator has been designed to make projections transparent and easy to understand.
How are some umbrella companies providing inaccurate take-home pay projections?
Firstly, it’s important to remind ourselves that all compliant umbrella companies operate in the same way – they process payroll in accordance with the government’s tax system called Pay As You Earn (PAYE). The only thing that varies between umbrella companies is the margin they deduct for processing payroll. Usually, umbrella company margins vary between £15 and £30 per week. The margin is the only thing that should change workers pay retention between umbrella companies. For example, a contractor will retain slightly more of their pay with an umbrella with a £15 per week margin compared to an umbrella with a £30 per week margin.
However, it’s no secret that umbrella companies are being sneaky and are deliberately inflating the calculations they hand out to temporary workers. After all, if a contractor is new to umbrella companies and one is quoting them far higher pay retention compared to another – it’s no surprise their contractors are being swayed.
There are many ways umbrella companies inflate calculations, including:
- Using an inaccurate tax code.
- Not taking annual leave into consideration (and basing calculations on the worker taking no time off and working every day of the year).
- Including a fixed amount for expenses – even though umbrella employees are unlikely to be eligible for them.
- Not including student loan repayments, which may be relevant for some workers.
- Ignoring the £100,000 abatement.
- Mentioning net margin to contractors, rather than gross. Net margins are lower than gross margins, meaning an umbrella may say they have a lower margin, but it’s higher when compared to another provider taking their margin from gross. If a gross margin is £15, the net margin would be lower.
- Loan schemes, disguised remuneration, job boards, etc. – all examples of non-compliant and unethical arrangements that the government considers tax avoidance (and could land you in serious trouble). Never engage with a tax avoidance scheme, and always make sure any umbrella you consider using operates PAYE.
Our new umbrella company calculator is designed to be transparent and helpful
The team did not build Umbrella Company Calculator to tell contractors what to do. Instead, a lot of time and commitment has ensured the tool is accurate and easy to understand so temporary workers can make better-informed decisions regarding their payroll.
Everybody’s circumstances are different, and dozens of factors could impact a worker’s take-home pay. Our calculator considers the most common elements so that you can get a proper understanding of your pay potential through an umbrella company. Before you go ahead and use our new umbrella company calculator, please read our disclaimer.
Get a free umbrella company calculation now
Our new umbrella company calculator is ready to use now. Please click here to get an instant, and accurate umbrella company take home pay illustration. The calculator is free and is available to all. Would you mind passing the link to your friends, family members and colleague who may be interested in getting an umbrella company calculation?
Thank you for visiting Umbrella Company Calculator, and we hope you enjoy using the tool. If you have any feedback, comments or recommendations, please email info@umbrellacompanycalculator.co.uk or contact us on this page.
