The calculator above shows how much of an Inside IR35 assignment rate reaches you when you're paid through an umbrella company. The numbers are set largely by law: employer National Insurance, the Apprenticeship Levy and your own tax all come out in the same order whichever umbrella you use. What differs between umbrellas is the margin, how they handle holiday pay and pensions, and whether they're operating legitimately. This guide covers how to choose.
A worked example: £500 a day
Taylor takes an Inside IR35 contract at £500 a day, working 220 days a year, so £110,000 goes to the umbrella. The umbrella charges a margin of £20 a week, about £1,040 a year. It must then pay employer National Insurance at 15% on Taylor's pay above £5,000 and the 0.5% Apprenticeship Levy, both from what's left. That leaves gross pay of about £94,987 for Taylor, with about £13,498 going on employer National Insurance and £475 on the levy.
After Taylor's own income tax and National Insurance, take-home pay is about £65,650, roughly 60% of the assignment rate. A different umbrella can change the margin by a few hundred pounds a year, but it can't legally change the rest. Any umbrella claiming you'll keep much more than the calculator shows deserves serious suspicion.
Read the Key Information Document
Agencies must give you a Key Information Document before you start an assignment. It sets out the rate the agency pays the umbrella, every deduction the umbrella makes, and an example of your take-home pay. Read it alongside the calculator. If the example take-home is much higher than the calculator suggests, ask how. If the document is missing or vague, ask for it before you agree to anything.
Holiday pay and pensions
Many umbrellas pay holiday as rolled-up holiday pay, adding it to each payslip, while others hold it back and pay it when you take leave. Either can be fine, but you need to know which. If it's held back, make sure you'll get any unused balance when the assignment ends. As an employee of the umbrella you should also be auto-enrolled into a workplace pension. Ask what the employer contribution is and whether you can pay in more through salary sacrifice, which saves National Insurance and income tax.
Warning signs
HMRC regularly warns contractors about umbrella-style schemes that promise unusually high take-home pay. The usual tricks involve paying part of your income as a "loan", "grant", "bonus" or other payment described as non-taxable. These schemes don't work. HMRC can ask you, not the scheme, for the unpaid tax, often years later and with interest. If an umbrella says you'll keep 80% or more of an Inside IR35 rate, walk away.
From April 2026, agencies, and in some cases end clients, became responsible for making sure the correct PAYE is paid when they use an umbrella company. That gives legitimate agencies a strong reason to use compliant umbrellas. It doesn't protect you if you knowingly join a scheme, so the checks above still matter.
Expenses through an umbrella
Since 2016, most contractors working through an umbrella company under supervision, direction or control can't claim tax relief on travel and subsistence for ordinary commuting to their assignment. Umbrellas that advertise generous expense schemes for Inside IR35 workers are a warning sign, because HMRC treats home-to-site travel as ordinary commuting. Genuine business expenses that you'd be able to claim as an employee, such as travel between sites during the working day, can still be reimbursed. Keep receipts and ask the umbrella how it treats them before you start.
Next steps
Enter your assignment rate above to see the full waterfall from rate to take-home. To compare the result with a permanent job, the day rate to salary calculator converts in both directions, and the take-home pay calculator shows a permanent salary's breakdown.