What does each part of your Umbrella Company Payslip mean?

Receiving a payslip is part of being a PAYE employee, and being employed with an umbrella company is no different. You will receive your payslip via email each time you are paid. Your umbrella payslip may look slightly different to that of a standard payslip, and we would always advise that you take a close look to understand the deductions.

When you join SG Umbrella you will be provided with a detailed pay illustration and example payslips detailing all pay elements and deductions from your income. We’ll also give you a quick call after your first payment, to explain your payslip and answer any queries you may have.

Please see below for an explanation of the key sections you can expect to see on your payslip:

Section 1 – Company Income Received

The assignment rate is the rate paid to your umbrella company by the agency or end client. This is the agreed daily or hourly rate and the units are the number of days or hours worked. The week ending date relates to the week or month worked and being paid in this payslip.

From the assignment rate, your umbrella company will make the following deductions:

Apprenticeship Levy – 0.5%

Employers NI – 13.8%

Employers Pension – 3% (if applicable)

Private Pension – This could be a fixed amount or percentage (if applicable)

Company Margin – This is the weekly or monthly margin that we retain as our fee.

Section 2 – Payslip

Included in this section are your personal details along with tax code, NI category, pay date and periods.

Tax Code – This represents the amount of pay you can earn before you pay tax. This is usually based on your personal allowance. For 2024/25 the standard tax code is 1257L, which equates to £12,570. There are many different tax codes, and these are explained further in our ‘Understanding your Tax Code’ blog.

NI Letter – This is determined by which employee group you fall under. Category A is the standard category for most employees, unless they are under 21 or above pensionable age.

Pay Date – This is the date that the payment is made, and the payslip is generated.

Periods – This is the numbers of weeks or months that are covered in this payslip.

Section 3 – Payments

Basic Rate – This is the number of hours worked multiplied by National Minimum Wage. This is currently £11.44 per hour.

Holiday Pay – This is calculated at 12.07% of your taxable income. This payslip shows holiday pay being paid out rather than accrued (this is the most common option).

Additional Taxable Pay – This is the balance of your taxable pay after National Minimum Wage and Holiday Pay have been calculated.

Section 4 – Deductions

This section shows the personal deductions made from your total payments shown in Section 3. These include PAYE (income tax), Employee NI and Employee Pension and Student/Postgraduate Loan (if applicable). The current rates for 2024/25 are as follows:

Basic tax rate – 20% and is applied to earnings up to £37,700.

Higher tax rate – 40% and is applied to earnings between £37,701 and £125,140.

Additional tax rate – 45% and is applied to earnings over £125,140.

Employee NI rates are 8% on earnings above primary threshold of £12,570 per year, up to the upper earnings limit. 2% on earnings above the upper earnings limit of £50,270 per year.

Employee Pension – Deductions of 5% will be included if you have chosen to be enrolled in the company workplace pension scheme.

Student/Postgraduate Loans – If applicable these will also be included in this section and the amounts will be dependent on the plan number.

Section 5 – Total Payment

This is the net payment that you will receive into your bank account.

Here is the whole payslip, in case you wish to see it put together:

SG Umbrella – here to help

We know sometimes taking the leap from permanent employment to using an Umbrella Company can be confusing, especially when it comes to understanding your pay. The team here at SG Umbrella are always available to talk through any questions and queries you may have, and encourage you to get in touch if there’s any areas of your payslip which need further explanation. Simply give us a call on 01962 896958, or email us at support@sg-umbrella.co.uk.