The UK government has launched a new beta tool aimed at helping umbrella workers and recruitment businesses to estimate gross and net pay and more clearly explain deductions.
The launch comes in response to growing concerns over tax compliance and transparency in the umbrella sector, highlighted by the Chancellor and Labour government in its first Budget in 14 years.
The calculator tool – which can be viewed and used here – can be used to estimate what gross and net pay (take-home pay) should be from an umbrella company for a single role and the assignment pay rate. It calculates and sheds light on the deductions applied to this pay, such as National Insurance contributions and tax, and also rolls-up holiday pay as part of the calculation.
All input information and data are not retained or used by HMRC, so everything is anonymous.
In particular, recruiters can use the pay calculator to estimate pay for an umbrella company worker, which will help ensure greater accuracy when managing pay estimates for umbrella workers.
For recruiters as well as individuals working through an umbrella company, the calculator is designed to help them better grasp the associated financial implications. However, it only supports calculations for the current tax year.
Because it works out pay based on category A National Insurance contributions, the calculator is for workers:
- aged 21 or over
- under State Pension age.
The development and launch of the tool signals a commitment by HMRC to improving transparency, compliance, and fairness for workers, and is widely seen as a welcome development and a step towards a clearer and more ethical sector. By providing a standardised way to calculate pay, HMRC is offering a tool that may expose unscrupulous umbrella companies, which are often at the heart of compliance issues within our industry.
Furthermore, it demonstrates HMRC’s commitment to helping workers and businesses navigate the complexities of umbrella pay with more clarity. It is hoped that it may also help highlight potential compliance issues, especially with less ethical organisations which continue to manipulate pay structures to their advantage.
View the calculator here.
