As an umbrella employee, you are taxed at the same rate as any permanent employee: 20% if you earn within the basic rate tax bracket, 40% if you earn within the high rate tax bracket and 45% if you earn within the additional rate band.
Working under an umbrella company essentially makes you an employee, meaning you are charged income tax according to PAYE rates and not limited company rates. Being taxed on an employment basis in this way means your level of income will determine your tax rate.
2024/25 Tax Year (If you are an English or Welsh tax payer)
For the above tax year, if you earn less than £12,570, then your earnings fall within the personal allowance threshold, meaning you don’t have to pay any tax.
If you earn between £12,570 and £50,270 then will fall into the basic rate bracket and be taxed at 20%.
If you earn between £50,270 and £125,140 you will fall into the higher rate bracket and be taxed at 40%.
Income above £125,140 is in the additional rate tax bracket at 45%.
Scottish 2021/22 Tax Year
| Band | Income Range | Rate |
| Starter Rate | Over £12,570 – £14,732 | 19% |
| Basic Rate | Over £14,732 – £25,688 | 20% |
| Intermediate Rate | Over £25,688 – £43,662 | 21% |
| Higher Rate | Over £43,662 – £150,000* | 41% |
| Top Rate | Over £150,000** | 46% |
Scottish 2022/23 Tax Year
| Band | Income Range | Rate |
| Starter Rate | Over £12,570 – £14,732 | 19% |
| Basic Rate | Over £14,732 – £25,688 | 20% |
| Intermediate Rate | Over £25,688 – £43,662 | 21% |
| Higher Rate | Over £43,662 – £150,000* | 41% |
| Top Rate | Over £150,000** | 46% |