How Do Umbrella Companies Structure Their Fees and Costs?

Umbrella companies will usually structure their fees and costs using a fixed-term umbrella margin.

Fixed-rate umbrella margin: Contractors are charged a fixed umbrella margin by their umbrella company whenever they are paid. For instance, if you are paid by an umbrella company on a weekly basis, you will be charged the same fixed umbrella margin of £25 by your umbrella company every week they process your payment.

What Are the Average Costs of an Umbrella Payroll Company?

There are many umbrella companies out there, but the typical industry average ranges from £20 - £30 a week for weekly payroll or £80 - £120 for monthly payroll. All compliant umbrella payroll companies following HMRC guidelines and IR35 rules should process your payments the same way, so the only difference should be what they charge as their umbrella margin.

Do Umbrella Companies Put Their Umbrella Margin on Their Online Forms or Calculators?

With the increasing need for contractors to compare umbrella payroll companies quickly and easily anytime, umbrella companies now offer take-home pay calculators and online forms. A compliant take-home pay calculator will illustrate what your take-home pay could be while clearly showing the assumptions made while calculating your take-home pay illustration.

Calculating take-home pay is extremely complex, so it is always best to speak to an umbrella company directly so they can provide you with an accurate umbrella company margin.

Are There Any Other Costs Involved With Umbrella Companies?

A straightforward umbrella company will always be upfront about any extra costs associated with their payroll service, so you are always clear about umbrella company costs.

Other costs associated with umbrella companies include:

Joining or leaving fees – Some umbrella companies charge contractors a fee for joining or leaving their payroll service to cover the admin costs for adding you to their payroll.

Apprenticeship Levy – Apprenticeship levy is the UK tax that all applicable employers must pay, which is used to fund apprenticeship training in the UK. Most umbrella companies will usually charge you apprenticeship levy and display it on your payslip, factoring this into your umbrella pay rate.

Same day payment charges – This is the charge that some umbrella companies will charge you for same-day payments.

Insurance cover – As an employee paid through PAYE, your umbrella company as your employer would have to make sure you are covered by employer’s liability and public indemnity insurance. Some umbrella companies charge more for this insurance, so it is essential to get clarity before joining an umbrella company.

Can I Claim Back Transport Costs Through an Umbrella Company?

As a contractor inside IR35, you cannot claim back costs for travelling to work. The only exemption to this would be instances where you travel between multiple worksites during your working day. In these instances, you may be able to claim mileage expenses for using your vehicle to travel for work using the following HMRC guidelines.

Apart from the exemption shown above, contractors cannot claim any travel expenses through their umbrella company. If you still wanted to claim expenses, you would need to claim travel costs through your recruitment agency or the end client company directly.

How Does Unified Payroll Compare in Terms of Charges and Fees?

As an umbrella company that prides itself on contractor satisfaction, we:

• Offer a competitive umbrella company margin that is cheaper than the industry average of £25 a week
• Absorb the cost of apprenticeship Levy, so contractors using us do not have to pay apprenticeship levy.
• Provide all PAYE contractors using our payroll service with employer’s liability and Public Indemnity insurance at no extra charge.
• Do not charge joining or leaving fees for our payroll service.
• Do not charge extra for same-day payments so contractors can get paid quickly at no additional cost.

Contact Us

If you have any questions about take home pay, joining our PAYE umbrella scheme, HMRC guidelines, IR35 or AWR legislation, you can contact our expert sales team. 

​​Our sales team are available Monday to Friday from 9 am to 5 pm.