Some umbrellas quote this margin net of tax, while others provide the gross fee, so comparing options can get confusing.
Fixed fees offer predictability for contractors, especially those on long-term or regular contracts. You’ll always know what you’re paying, regardless of your income.
Percentage fee (rare)
A smaller number of umbrellas may charge a percentage of each invoice instead of a fixed fee. This was fairly common in the 2010s but is far less common now in 2025.
The percentage model is rare in the PAYE umbrella sector as it means the umbrella’s fee increases in line with the contractor’s invoiced income, even though their administrative work remains largely the same.
Contractors should typically avoid the percentage model.
There are plenty of good fixed-fee umbrella companies to choose from.
Gross vs. net margin – don’t be fooled!
The umbrella margin is deducted from your assignment rate, meaning that it is tax deductible.
In other words, if the margin is £25, this amount isn’t deducted from your take home pay.
It comes out of your assignment rate, so, after tax, it will only cost you £15 or thereabouts, depending on your tax code.
This can cause some confusion when you try to compare margins between providers.
A reputable umbrella will tell you its regular weekly and monthly fees—these gross margins should be displayed on its website. If an umbrella uses net fees in its marketing material, it might be time to move on with your search.
Always ask for a Key Information Document (KID) when comparing providers. This mandatory document should show a breakdown of pay and deductions, helping you spot any discrepancies or hidden fees.
How much is a typical umbrella company margin?
The umbrella market is highly competitive, and most reputable providers charge fixed fees between £25 and £30 per week.
Some providers offer an eye-catching initial fee for a fixed period, sometimes as low as £10 per week.
Monthly fees vary, but commonly range from £80 to £120.
Other Considerations
No PAYE umbrella company can legitimately save you tax, via expense reclaims or other methods. The only saving you can make by switching providers is the cost of using the service.
Price is one of several factors you should consider when choosing an umbrella company.
Other factors, such as the quality of service, the background of the company itself, and any personal recommendations you have received from other contractors, are also important.
Make sure the umbrella is FCSA-accredited or part of another recognised industry body. This adds a layer of accountability and ensures compliance with HMRC rules.
Watch out for companies offering “enhanced take-home pay” or complicated schemes. These can be non-compliant and may result in large tax bills later.
