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What Taxes do I pay working through the Umbrella Company?

Working through an Umbrella company does not mean you pay less tax than non-contractors. You are still liable to pay National Insurance and PAYE income tax. On top of this, as a contractor working under and umbrella company, you are also liable to pay your employers National Insurance. As a contractor, your rate of pay should reflect this contribution and should therefore be higher than if you were a non-contractor.

Employer’s national insurance is currently 12.8% (08/09 tax year) of all earnings over £105 per week. This is a cost the contactor is expected to meet however, this cost is mitigated by the increased rate that the agency will pay you for working through an Umbrella Company.