# Umbrella rate vs PAYE rate

Forumite Posts: 2
Newbie
Hi, I work 25hrs a week , have an new umbrella rate of 17.02£ per hour or PAYE rate of 13.82 per hour.
I asked my agency they said Umbrella rate is equivalent to my PAYE rate.
My understanding is that if I go through an umbrella company, after all deductions have been made (NI, margin, levy), the rest will be my gross pay.
1.If I divide the gross pay by 25 hours, should it match the PAYE rate?

2. My previous umbrella rate was 16.50, and PAYE rate was 12.50. However the new umbrella rate 17.02 seems to be so low for the new PAYE rate of 13.82. Can somebody let me know how they calculate it?

• Forumite Posts: 8,817
Forumite
I'm afraid there isn't a simple yes/no answer, but I hope this will make helpful reading and enable you to understand the differences (or at least query them from an informed standpoint): https://www.litrg.org.uk/sites/default/files/files/LITRG-Factsheet-working-through-an-umbrella-company.pdf
Googling on your question might have been both quicker and easier, if you're only after simple facts rather than opinions!
• Forumite Posts: 2
Newbie
Hi Macron, so end of the day whether Umbrella rate ( gross pay after all their deductions )or PAYE rate . The hour rate will still remain the same ?
• Forumite Posts: 1,295
Forumite
When you use an Umbrella company you / the Umbrella company have to pay the employer's National Insurance, at 13.8%. You also don't get any holiday pay, which you would be entitled to under PAYE. The Umbrella company will also charge for its service, probably about £20 a week.

Looking at the numbers it does look approximately equivalent. The link that Marcon provided also seems to confirm this, more or less.

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