Net Pay

At Umbrella Staff, we have a dream

Calculating your net pay is what we dream about because we know that when you get your money in your back pocket, it brings a smile to your face.

Our people work hard to maximize your pay whilst keeping you absolutely on the right side of the UK’s tax laws.

Other companies use all kinds of funny business like off-shore accounting, turning a blind eye on false expenses, or capital gains trickery. Our Manchester-based operation complies fully with every aspect of the law. Companies like ours get co-operation from the tax man precisely because we pay all the taxes that are due. We pride ourselves on being able to maximize your after-tax income without anything less than full and strict compliance with the spirit and letter of the law.

How is my net pay calculated?

If this were simple to explain, you might not need us because running your own limited company would be less of the nightmare than it is. But, let’s have a go.

When we receive your timesheet and expenses claim, we bill the client. Many of our clients do not use our invoice because they are ‘self-billing’. That is, they bill themselves based on the timesheet and expenses claim you provide to them directly. Either way the net effect is the same. A debt is created from the client to us for the total value of your work plus any expenses for which the client agreed to reimburse you.

The amount billed will include Value Added Tax. By law, this is charged on top of any amount that you may have agreed with the client and is paid directly to HM Revenue and Customs.

Most of our clients are recruitment agencies, and they tend to pay within a few days of being billed.

On receipt of payment, we first deduct your billed expenses from the money we receive. We set this amount to one side and add it back at the end of the calculation because you will get all of this money without deduction. We then do the same thing with your non-billable expenses. Usually non-billable expenses will be the cost of travelling to your temporary workplace and a scale payment for lunch on the days you worked there. You will get this money without deduction, too.

Next we deduct an amount exactly equivalent to what we are going to have to pay to HM Revenue and Customs in Employer’s National Insurance in respect of your employment. This is by far our largest single operating cost as an employer, which is why we itemise it during the calculation.

Then we deduct a small amount as a contribution to our company’s other operating costs. The gross amount deducted varies depending on whether you are a higher or lower-rate taxpayer, but the net cost after tax to you is always £20-a-week for weekly paid employees, and £65-a-month for the monthly-paid.

Gross Taxable Salary

The figure we have at this stage is your gross taxable salary. This is the amount you are entitled to be paid subject to tax, and is the amount on which income tax and all national insurances are calculated. Income Tax and Employee’s National Insurance are deducted from the Gross Taxable Salary. We pay the Employer’s National Insurance using the funds set aside earlier in the calculations.

We break down the Gross Taxable Salary into three component parts:

First, we pay you your basic salary. This is the national minimum wage for the number of hours you actually worked.
Second, we pay you your holiday pay. This is an amount over and above your basic salary and is advance payment for any holidays you may take over the coming year. We must pay you for holidays by law.
Third, we pay you any remaining balance as commission for bringing your contract to the company.

We then pay you the gross amount of any expenses due to you that were set aside at the start. All four of these components are settled straight into your bank account as a single payment, and we send you an electronic payslip confirming the amounts.

We offer a choice of payment methods: BACS, which is free to you but can take 2-3 working days to arrive in your account, or CHAPS, which is a same day payment, but carries a fee per payment of £20. You choose when completing your application form which payment method you prefer, and we deduct any CHAPS costs from the contract income before determining your gross salary.

All this happens on-time, every time.

All you have to do is get your timesheet and expenses claim to us promptly.