Understanding umbrella payroll deductions
Every deduction between your assignment rate and your take-home pay, with 2026/27 rates.
Umbrella pay has two sets of deductions. Employment costs come out of the assignment income first. Your own deductions come out of your gross pay second.
Stage 1: employment costs
| Deduction | 2026/27 |
|---|---|
| Umbrella margin | The provider's fee. Ours is £20 a week (Standard) or £22.50 (Platinum) |
| Employer National Insurance | 15% of pay above £96 a week |
| Employer pension | At least 3% of qualifying earnings, if you are enrolled |
| Apprenticeship Levy | 0.5%, only for employers with a pay bill over £3 million |
Stage 2: your deductions
| Deduction | 2026/27 |
|---|---|
| Income Tax | Depends on your tax code. With 1257L: 20% basic rate, 40% higher rate |
| Employee National Insurance | 8% between £242 and £967 a week, 2% above |
| Pension | Your contribution, if enrolled |
| Student loan | 9% above your plan's threshold, e.g. Plan 2 from £565.09 a week |
Source: GOV.UK rates and thresholds for employers 2026 to 2027.
Why employer costs come from the assignment rate
The assignment rate is the total the agency pays for your work. Because the umbrella company is your employer, the costs of employing you are funded from that amount. A compliant umbrella shows these costs on your payslip rather than hiding them.
Try the umbrella calculator to see your own figures.
Frequently asked questions
Is it legal to deduct employer National Insurance from the assignment rate?
Yes, this is how umbrella employment works, provided it is clearly explained, including in your Key Information Document.
Why is my take-home pay different from the calculator?
Your tax code, pension, student loan and cumulative tax position all affect your pay. Ask us for a personalised illustration.
Need help with this? Our payroll and compliance team can talk it through with you. Try the umbrella calculator.
Last reviewed 9 October 2026. General information, not legal or tax advice.