Free tools
Umbrella vs agency PAYE take-home
Compare your monthly take-home under agency PAYE and an umbrella company on the same assignment rate. See exactly why an umbrella nets less once employer National Insurance, the apprenticeship levy and the margin come out of the rate. Updated for 2026/27.
Agency PAYE
–
take-home a month
| Assignment rate (a year) | – |
|---|---|
| Income Tax | – |
| Employee NI | – |
| Take-home a year | – |
Umbrella company
–
take-home a month
| Assignment rate (a year) | – |
|---|---|
| Umbrella margin | – |
| Employer NI (15%) | – |
| Apprenticeship levy (0.5%) | – |
| Your gross salary | – |
| Income Tax | – |
| Employee NI | – |
| Take-home a year | – |
Why the two columns differ
Agency temps are often given a choice: get paid through the agency's own PAYE payroll, or through an umbrella company. On the same headline rate the umbrella almost always leaves you with less, and it is worth understanding exactly why before you pick.
Agency PAYE
With agency PAYE the rate you are quoted is treated as your gross pay. The agency pays employer National Insurance and the apprenticeship levy on top, as a cost to the agency, not a deduction from your rate. You then pay your own Income Tax and employee National Insurance, the same as any employee.
Umbrella company
An umbrella company employs you and invoices the agency at the assignment rate. That rate has to cover the employment costs, so before you see any gross salary the umbrella takes its margin, then employer National Insurance at 15% on pay above the £5,000 secondary threshold, and the apprenticeship levy at 0.5%. Only what is left becomes your gross salary, and your own Income Tax and National Insurance come off that. Two lots of National Insurance, employer and employee, are effectively funded from the one rate, which is why the take-home is lower.
2026/27 figures used here
| Cost | Rate | Applies to |
|---|---|---|
| Employer National Insurance | 15% | Pay above £5,000 a year |
| Apprenticeship levy | 0.5% | All gross pay |
| Employee National Insurance | 8% then 2% | Your pay above £12,570 |
| Income Tax | 20% / 40% / 45% | Your pay above £12,570 |
Frequently asked questions
Why does an umbrella company leave me with less than PAYE?
Under agency PAYE the rate you are quoted is your gross pay, and the agency pays employer costs on top. With an umbrella company those employer costs, mainly employer National Insurance and the apprenticeship levy, plus the umbrella's weekly margin, come out of the assignment rate first. So the same headline rate gives you less take-home through an umbrella.
What does an umbrella company actually deduct?
From the assignment rate, an umbrella takes its own margin, then employer National Insurance at 15% on pay above the £5,000 secondary threshold, and the apprenticeship levy at 0.5%. What is left becomes your gross salary, from which your own Income Tax and employee National Insurance are then taken like any other job.
Is comparing the same rate for both fair?
Not always. Agencies often quote a higher rate for umbrella or limited-company work precisely because employer costs come out of it. The honest comparison is like for like: put the PAYE rate in the PAYE column and the umbrella rate in the umbrella column, then see which leaves you better off after everything.
What is the umbrella margin?
The margin is what the umbrella keeps for running your payroll, usually a fixed amount each week or month regardless of your rate. It is the only part that is genuinely the umbrella's fee. Everything else it deducts is tax, National Insurance or the levy that would be payable anyway.
Which is better, umbrella or PAYE?
For a single assignment at the same rate, agency PAYE usually leaves more in your pocket and is simpler. Umbrellas can suit people working across several agencies who want one payslip, continuity of employment and statutory benefits. Neither is a way to pay less tax on the same money. Be wary of any umbrella promising unusually high take-home.
Looking for temp or contract work?
Search live UK roles now. Every listing shows the pay up front.