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Your umbrella company payslip explained
Getting a payslip is part of being a PAYE employee and being employed with an umbrella company is no different in that respect. You’ll get a payslip (usually electronically) for every pay period you work.
Most of us just give our payslips a cursory glance at the bottom line for what is going into our bank account, and that’s totally fine! But it can also be worth giving your payslip a bit more attention, if only to understand what is being deducted and where.
When you first register with Liquid Friday, we’ll give you a complete pay illustration, detailing all elements and deductions from your assignment income, including our margin.
The deductions on your payslip should reflect what you are told during this call, and what is shown on your Key Information Document (KID). Just in case, we’ll give you another call after your first payment to give you a specific walk through of your payslip and answer any additional questions.
Here’s a general explanation of the figures you can expect to see:
Your Liquid Friday Umbrella Payslip
Personal details
Your name and address are stated on the bottom left of your payslip. If your address changes, be sure to let us know.
Working down, you’ll find your agency, your personal payroll number, your name and your National Insurance number.
The period the payslip covers is also stated at the top, this includes the tax period and week ending date. You will also find the date your payment was processed by our payroll system.
Company Receipts
The assignment rate (also known as “charge out rate”) which is paid to Liquid Friday from your agency is set to cover all employer and employee deductions. Company Receipts is the assignment rate multiplied by the number of units (hours or days), equalling the total amount received by Liquid Friday.
Company Deductions
Employers NI
A deduction from the assignment rate made to Liquid Friday by the agency, which we are required to make as an employer. This is a 13.8% deduction and is paid directly to HMRC.
Apprenticeship Levy
The amount Liquid Friday pays to the government in supporting apprenticeship schemes. As an employer, you must contribute to this if your annual pay bill reaches a certain threshold. The apprenticeship levy is a 0.5% deduction.
Expenses
Any allowable work related expenses.
Company Margin
This is our Profit Margin from the assignment. The amount will depend on the agreement between Liquid Friday and the agency you are working through.
Retained Holiday Pay
As an employee you are entitled to holiday pay. This is a pro-rated amount of 28 days annually. Typically we retain this until you take time off, or until your employment ends. Your payslip shows the amount retained.
Employer Contribution
When you join Liquid Friday as an umbrella employee, you are auto-enrolled into our approved workplace pension scheme with Now:Pensions (as is required by law). Your pension contributions are taken before tax is calculated, making it a tax-efficient way to save for retirement.The Employer Contribution portion of your pension is shown here.
Employee Payments
These show the taxable amounts remaining after company deductions have been made.
Basic
The hours or days worked at the National Living Wage (National Minimum Wage if you are under 23 years old)
Holiday Pay
If you are not having your holiday pay retained, but paid with your wages, it will be shown here.
Assignment Commission
This is additional taxable income above the National Living Wage. If you have worked for other umbrella companies before, you may have seen this referred to as a Bonus or Additional Taxable Wage.
Employee Deductions
Tax
This is PAYE tax, also known as Income Tax, which all employees pay. The level at which you start paying this, depends on your tax code, which in turn dictates your personal tax allowance.
National Insurance
Employees National Insurance is a deduction made on all employees to cover sickness, unemployment and retirement in society. The percentage of this deduction is 12%.
Now Pension Deduction
As previously mentioned, as a Liquid Friday employee, you are auto-enrolled into our approved workplace pension scheme with Now:Pensions. The Employee Contribution portion of your pension is shown here.
Umbrella payslips – what to look out for
We hope this breakdown has been helpful. While it applies specifically to Liquid Friday payslips, all compliant umbrella company payslips should contain broadly the same information, although it may be formatted a bit differently.
You should be wary of an umbrella payslip that does not show all payments made by the umbrella company, especially where they involve loan type arrangements. For example, you may receive additional payments that aren’t shown on your payslip and get an email to say an amount has been made to you as a loan. This is a massive red flag and could be a sign of a tax avoidance scheme.
HMRC has some useful guidance on what to look out for here