HMRC has launched a new online tool to help workers paid through umbrella companies ensure their pay and deductions are being handled correctly.

The Work out pay from an umbrella company tool provides an estimate of what a worker’s gross and net pay should be based on the assignment rate and their circumstances, which can help identify discrepancies between the expected and actual pay.

Umbrella companies are required to calculate pay and deductions following specific steps. They receive an assignment rate from the agency or end client, deduct employment costs (eg National Insurance, apprenticeship levy, pension contributions), and pay the worker the remaining amount after deductions like PAYE and student loan repayments.

The new tool calculates an expected pay outcome, which workers can compare with the details from their payslips.

This tool is particularly useful in identifying non-compliant practices by umbrella companies. It offers transparency on how workers’ pay should be calculated, including holiday pay, and helps workers track their deductions to ensure fairness. In cases where discrepancies are flagged, workers are encouraged to seek further guidance from their umbrella company or speaking with HMRC.

With higher employer National Insurance contributions and increased National Minimum Wage rates applying from April, workers should be especially vigilant. If their umbrella company doesn’t adjust the assignment rate accordingly, workers could see reduced gross pay. HMRC’s tool can help track such changes and identify issues early.

Currently in public beta, the tool invites feedback from users to improve its functionality.

Workers can find out more information about working through an umbrella company on GOV.UK.

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