Using an umbrella company costs more than just a weekly margin. You need to understand what each deduction is and why it exists. This guide breaks down every cost on a typical umbrella payslip in 2026-27.
New to umbrella companies? Start with our guide to understanding umbrella companies.
What does an umbrella company cost?
An umbrella company charges a weekly or monthly margin, typically £15 to £25 per week in 2026-27. That’s the umbrella’s fee for running your payroll. It’s not the only deduction from your contract rate. Employer National Insurance, the Apprenticeship Levy, income tax, and employee NIC all reduce your take-home pay too.
The margin is the umbrella’s only direct profit. Everything else goes to HMRC or meets a legal obligation. That matters because it shows which deductions the umbrella controls.
Your contract rate is not your gross pay. The umbrella receives your rate, deducts statutory employer costs first, and what is left becomes your gross pay.
What is the umbrella margin?
The umbrella margin is the weekly fee your provider charges to employ you. Most providers charge between £15 and £25 per week in 2026-27.
Some providers show this as a monthly figure. A £20/week margin is roughly £87/month. Always ask for the weekly rate so you can compare providers fairly.
The margin covers payroll processing, employer admin, workplace pension enrolment, and holiday pay processing. It does not cover employer NIC or the Apprenticeship Levy. Those come out before you receive gross pay.
What else gets deducted before you’re paid?
Several statutory costs come out before the umbrella sets your gross pay.
Employer NIC sits at 15% on earnings above the Secondary Threshold (£9,100/year). The umbrella pays this directly to HMRC. It’s a cost of employing you, not a profit line for the umbrella.
The Apprenticeship Levy is 0.5% of your pay bill above £3 million. Most umbrellas absorb this cost within their margin. DASA Umbrella does.
Holiday pay is also funded from your assignment rate. With rolled-up holiday pay, 12.07% is added to each payslip. With accrued holiday pay, the amount is held and paid when you take leave.
These three items come out before your gross pay is set. Then income tax and employee NIC come off your gross pay through PAYE.
Worked example: £350/day, 20 days per month
Here’s how the numbers look for a contractor on £350/day working 20 days in a month.
- Contract income (20 days x £350): £7,000.00
- Umbrella margin (£20/week x 4 weeks): -£80.00
- Employer NIC (15% above threshold): -£769.50
- Apprenticeship Levy (absorbed in margin): £0.00
- Gross pay: £6,150.50
- Employee NIC (8% on £12,570-£50,270 band): -£338.20
- Income tax (20% basic rate above £12,570 PA): -£928.46
- Estimated net take-home: ~£4,883.84
These figures are estimates. Your actual net pay depends on your tax code, pension contributions, and exact working days. Use the umbrella pay calculator to run your own numbers.
Employee NIC in 2026-27: 8% on earnings between £12,570 and £50,270. It drops to 2% above £50,270.
Income tax personal allowance is £12,570. Basic rate is 20% up to £50,270. Higher rate is 40% above that.
What’s a fair margin to pay?
A fair umbrella margin sits between £15 and £25 per week. Some providers charge less. A few charge more. Be cautious of very low margins. Running a compliant payroll has real costs, and a provider below £15/week usually cuts corners somewhere.
Be equally cautious of opaque pricing. If a provider won’t state their margin clearly upfront, that’s a red flag.
DASA Umbrella holds dual accreditation from FCSA and Professional Passport. Both bodies require transparent fee disclosure as part of their compliance standards. You know exactly what you pay before you sign. Find out more about umbrella company services at DASA Umbrella.
How do you compare umbrella company costs?
Compare providers on margin size, transparency, and compliance status. Don’t compare on headline take-home figures alone.
Some providers quote inflated take-home figures using non-compliant schemes that HMRC does not recognise. If a take-home figure looks too good, it almost always is.
Ask every provider these four questions before you sign:
- What is your weekly margin, stated in pounds?
- Do you show employer NIC separately on my payslip?
- Are you FCSA or Professional Passport accredited?
- How do you handle holiday pay?
Compliance accreditation matters. FCSA and Professional Passport audit their members against HMRC standards. DASA holds both accreditations. That means two independent bodies have checked the payroll process.
Read the umbrella compliance guide. It covers exactly what to look for.
Frequently asked questions
How much does an umbrella company cost?
Most umbrella companies charge a margin of £15 to £25 per week in 2026-27. That fee covers payroll admin. Employer NIC (15%), income tax, and employee NIC are separate statutory deductions handled through PAYE.
What is the umbrella company margin?
The margin is the weekly fee your umbrella charges to employ you and process your pay. It typically ranges from £15 to £25 per week and covers payroll processing, pension enrolment, and admin.
Does employer NIC come out of my contract rate?
Yes. Employer NIC at 15% is deducted from your contract rate before your gross pay is calculated. Your umbrella pays it directly to HMRC. It’s a statutory cost, not a profit line for the provider.
What is a fair umbrella margin?
A fair margin is between £15 and £25 per week. Be cautious of margins below £15. Compliant payroll has real running costs. Always check your provider holds FCSA or Professional Passport accreditation.
How do I compare umbrella company costs?
Ask each provider for their weekly margin in pounds, check whether employer NIC shows separately on payslips, and confirm their accreditation status before you sign.
