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Umbrella Pay Calculators – What are they Good For?


Umbrella Pay Calculators

If you’re new to contracting and you’re conducting research online, you’ll no doubt have come across several umbrella pay calculators, like our take home pay calculator

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Online calculators are designed to give you an idea of what you might be paid. While many concentrate on umbrella, some might also provide comparison figures for other options. For example, Orange Genie’s calculator will show you estimated net pay figures for:

  • Running your own limited company (outside IR35),
  • Umbrella Employment
  • Agency PAYE

Calculators like this provide a quick and easy starting point and give you an idea of what to expect, but they aren’t intended to give you a definite figure on which to base your decisions. Your actual net pay will depend on a number of personal factors, including what other income you’re receiving, some details of your working practices and the value of expenses you’re claiming. An online calculator just doesn’t have enough information to accurately predict your net pay.   

We’d always advise you to get a specific pay illustration from an expert, as this will take your particular circumstances into account and give you a much more accurate figure.

Comparison between umbrella companies

While online calculators are useful as a starting point to give you a rough idea of what you could be paid, they are of limited use for comparison between umbrella companies. All compliant umbrella companies operate under the same rules and will therefore pay you roughly the same amount for any given contract.

The only variation in net pay will be the umbrella’s margin, and this is not usually enough to make a significant difference to your pay.

Where two umbrella calculators give you a significantly different figure, it’s usually because the assumptions behind the calculation are different, rather than the way the umbrella company will calculate your pay. If both companies are operating correctly, they’ll both pay you roughly the same amount, whatever their online calculator says.

A word of caution

So far, we’ve talked about compliant umbrella companies – meaning legitimate businesses who operate correctly in accordance with all relevant legislation.

There are some companies who will quote a much higher net pay figure, because they are not following the rules. These companies claim that they can pay you a higher net pay by reducing the amount of tax you pay, often by using a disguised remuneration scheme.

In reality, though they will obviously claim to be operating within the law, there is no magic accounting trick that will legitimately increase your net pay. Any company claiming to offer you a much higher net pay than their competitors is breaking the rules.

HMRC are increasing their enforcement activity in this area and actively targeting disguised remuneration schemes. Using a non-compliant model to decrease your tax will result in you paying more, not less, in the long term, as you’ll have to pay any tax you’ve “avoided” plus interest and penalties for late payment.

As legitimate umbrella companies will all pay the roughly the same, it’s best to steer clear of those who use the amount you’ll be paid as their main selling point. We’d also advise you to look for FCSA Accredited Members, as this is the best way to be sure you’re dealing with a compliant umbrella company who won’t put you at risk.

What to do next?

If you’ve tried some umbrella pay calculators and you’re ready to take the next step, why not call Orange Genie’s team of expert advisors? In just a few minutes they’ll provide an accurate pay illustration based on your specific circumstances, and advise you which is the best working arrangement for you. Call them on 01296 468 483 or email or read our guide to umbrella companies to find out more. 

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