What it means to be paid twice in a tax period as an Umbrella Company employee

As an Umbrella Company employee, you may find yourself being paid twice in any given tax period. So, what does this mean, will it cause any issues, and do you need to do anything?

In this blog we explore all those points, to help you understand what it means.

Being paid twice

Working under an Umbrella Company means that on occasion, you might be paid twice in any single tax period, due to the way in which some contracts work. But fear not! It’s usually nothing to worry about, as fluctuating and sometimes uncertain payments can be commonplace when contracting.

Even though this understanding is shared by almost all contractors, it may not stop you from thinking that you’ve been taxed twice in the single accounting period. Whilst this may be the case, it’s worth remembering that you’ll only always pay the correct amount of tax, as due to the way in which PAYE works, tax is adjusted based on the amount and timings of your payment.

The UK’s PAYE system – explained

As an Umbrella Company employee your tax and National Insurance Contributions (NICs) are deducted at source, before you’re paid (just as you would be as a permanent employee). For the correct amount of tax and NICs to be deducted, your employer must calculate how much you owe, and divide this total amount up evenly throughout the tax year.

The tax year runs from the 6^th of April each year to the following April 5^th, and the regularity in which you’re paid will ultimately determine whether your pay can be divided equally between the months of that tax year.

So, for example each tax month runs from the 6^th of the first month to the 5^th of the second, and the tax week begins on the day which the 6^th falls on. Therefore for the next tax year 2025/26 if the 6th of April 2025 is on a Sunday, the tax week will run from a Sunday to a Saturday.

Your Umbrella Company will then use this information to calculate the thresholds and allowances relating to your pay.

What it means when you receive two payments in any given ‘one’ tax period

If you’re a seasoned Umbrella Company worker that’s had a number of contracts and clients, you’ll know that you can be paid either weekly or monthly, and can usually expect to be paid once during that agreed period. Whilst this is usually the case, the following examples may mean you end up being paid more than once:

• If you’re working on multiple contracts with multiple clients and agencies
• If you receive an additional payment as a bonus for example
• If your wages are paid early due to an upcoming holiday, such as a bank holiday
• If your payment is delayed for whatever reason

Whilst being paid early or late can be annoying, it’s always worth remembering that you’ll never be taxed more than you should be, and that it’s a case of timing rather than a mistake being made.

What does this mean for your payslips?

If you do find yourself receiving multiple payments within a singular tax period, you’ll notice that your payslip is slightly different to what you’re used to receiving. But the following information provides an easy-to-understand way of reading your payslip:

Your last payslip in a period – will show the total figures for that particular tax period, which will include the amount that you’ve already received as your salary. This payslip will include all the information you’ll need to understand your pay for that particular tax week or month, including how much tax you’ve paid, etc.

Payment and deduction figures – will be the total amounts for that tax period, including any amounts previously paid to you in that tax period. This is also known as the ‘Net Pay Already Processed’.

The three figures for payments – will be broken down to show you the payments that were made to you post deductions:

1. The total paid to you this particular tax period
2. The total paid in any previous payments
3. The total amount paid to you within this particular payment

SG Umbrella are always here

Understanding your payslip can be confusing, without the added complication of being paid more times than expected. That’s where the expert team here at SG come in! We’re well-rehearsed in all things relating to Umbrella Company contracting, are on hand to offer our support and expertise whenever you need us. From payroll to pensions, holiday pay to tax advice, we’re here to help. Get in touch to find out more.