PAYE Calculator
Joining an umbrella company is the easiest way to work as a freelancer or contractor. Simply click on the link below to calculate your take home pay by inputting your weekly/monthly income and predicted expenses. The PAYE calculator will instantly estimate your net pay.
The main question on contractors’ minds is “How much money will I take home?”. To explain how contractor pay is calculated, we must first answer the question;
What is PAYE?
In the UK, Pay As You Earn Tax is the system that HMRC uses to collect Income Tax and National Insurance Contributions (NICs) from employees' pay as it is earned. The amount due is calculated by your employer according to HMRC regulations then deducted from your earnings before being paid to HMR&C each month. Expenses are also dealt with as part of the PAYE process and determination of what is / is not allowable is, again, down to HMR&C. Therefore, other than the margin retained, your take home pay should be the same through whichever umbrella company you chose. When making umbrella company comparisons, ensure that only the figures you enter are included in the calculation – we are aware that some on-line calculators assume expenses which, in reality, you would not be entitled to claim. In turn, this leads to a huge disappointment when your first payslip arrives and the take home pay is much less than you expect.
PAYE for freelancers and contractors
If you chose to operate via a Limited Company, you will be taking on the responsibility of registering for PAYE with HMR&C, unless you are outside IR35 which is becoming increasingly difficult. Not only will you have to make PAYE payments to HMR&C each month, you will also have to retain money in the company for corporation tax and, maybe, VAT. Late filing of any of these tax payments will give rise to fines and also interest payments on the debt.
ContractorUmbrella can relieve you of all of this stress and hassle as we take care of all PAYE and VAT payments to HMR&C; you won’t even have to complete a self-assessment tax form for the income that you earn whilst on assignment with us – so why not let us make your life that little bit easier?
If you have any questions about the figures produced by the Take Home Pay Calculator, then please contact our team on 01206 713680 or email us at info@contractorumbrella.com.
NB. When comparing calculators on umbrella service websites you must ensure that you are comparing like with like and a detailed breakdown should be available on request. The only variable factor in your net pay is the Umbrella Company margin, all other figures are determined by HMR&C regulations. Beware of hidden 'employment costs' for the AWR being passed on to you.
Our free guides are an invaluable source of information for contractors and have been downloaded by over 4,000 people. Visit our Download page and have access to the following guides:
- Expenses guide
- First-timers guide to contracting
- Guide to IR35
