What do you look for when comparing umbrella companies? Reviews, contract lengths, added extras? Much like any other product or service, it’s only natural that you want to know about the financial side of things too.

Contractors pay an umbrella company to provide employer-like services – such as processing their tax and payroll, providing paid leave and offering other employee benefits. But when finding the right umbrella you’ll want to know how much you’ll be paying, what you’ll receive as take-home pay, the disposable income you’ll be left with and whether it’s worth it.

At Umbrella Broker, we provide a free, transparent umbrella broker calculator that will not only show you your predicted payslip online, it will show you the impact of any benefits too – but that’s not always the case with other providers. This post looks at umbrella company calculators, how they vary and how to find the right one for you.

What is an umbrella company calculator?

An umbrella company calculator is supposed to do exactly what it says on the tin. It calculates how much you would earn as take-home pay through an umbrella company.

You enter your income, whether that’s daily, weekly or monthly. The calculator deducts any applicable tax or national insurance contributions based on that figure. The result? A clear sum that you could earn per day, week or month as a contractor.

Basic calculators will simply show you a breakdown of your take home pay. Others will factor in any benefits you might receive. With benefits like childcare contributions (and the disposable income you have left at the end of each month as a result) factored in, you might find yourself going for a slightly more expensive umbrella in order to be significantly better off at the end of the month.

Why is it so useful? In short, even when you know your daily rate, it’s hard to know what your best option is. Do you go through an umbrella company where you’ll be taxed as a regular employee or set up a limited company and take a salary and dividends?

As well as the administrative burden of a limited company you also won’t get any employee benefits. It’s important that you establish the financial difference between your options. With a good umbrella company calculator, that’s exactly what you’ll get. Or at least you should…

Be wary of glorified lead generation

What actually happens when you submit your details to most sites claiming to offer an umbrella calculator is very different to how we’ve described so far. After entering your details with a contractor rate, you receive a sales call where you’re persuaded to sign up to a range of different services or providers.

Essentially, they’re using the “calculator” as a lead generation form, rather than giving you the clear, detailed overview you want and need. In most cases you won’t actually get to see an accurate breakdown online.

Want to avoid this? Don’t use an umbrella company calculator that forces you to enter contact details. There’s no need for a calculator to request any contact information, such as your email address or phone number. Remember, there are plenty of good calculators out there that don’t require these details, so there’s no need to sign up for those that do.

How do umbrella company calculators differ?

It’s also worth being wary of how the umbrella company calculators work. Not all calculators are the same, and it’s important to know the differences before you make any big decisions based on the results.

When you enter your contractor rate, you may be asked for an hourly, daily or even weekly sum. The site will then use this to calculate a monthly or annual amount. This could be based on information you’ve provided about working hours – or it could be based on assumptions.

Let’s say you earn £50 an hour. To convert this into a weekly or monthly amount, they may simply assume you work a certain amount each day, week or month. In reality, you might not want to work 40 hours a week, or 52 weeks a year. After all, the best thing about contracting is you can be your own boss. So, it’s worth bearing that in mind when comparing figures.

Full clarity with calculations

Another area in which umbrella company calculators differ is how they present their calculations. Some will provide you with a single figure and no explanations. As mentioned above, this figure can come with assumptions which are probably not applicable to you.

Other calculators will fail to factor in a variety of costs or benefits. For an accurate calculation you need to consider tax allowances – such as the marriage allowance or childcare benefits – as well as the cost of the umbrella company itself.

It’s important to remember that just because an umbrella company is slightly more expensive than another in the calculation results, it doesn’t mean it’s the worst deal. If that umbrella offers employee benefits or will help you with things like childcare, you might end up with a higher disposable income as a result.

In order to decide which umbrella is right for you, it’s important then to collect as much information about the benefits the umbrellas are offering along with the deductions they make. The best umbrella calculators will give you a detailed illustration of what has been deducted. How much it amounted to and what it’s for. Deductions could include income tax, national insurance contributions or the cost of the umbrella company itself.

Look for transparency

Our best advice when it comes to umbrella company calculators is to look for transparency. If a company is trying to mislead you with their take home pay calculator, it doesn’t bode well for the future.

Umbrella Broker is a site you can trust to compare umbrella companies without any hassle. As part of our ongoing commitment to transparency, we’ve taken our detailed comparison calculator and stripped it back to provide an umbrella calculator that doesn’t require you to hand over any personal details.

We firmly believe that our umbrella company calculator is among the most transparent available. If you choose then to create an account and compare umbrellas online, you can on your own terms.

After creating an account we will ask you how often you bill (weekly, bi-weekly or monthly) and how many days a week you work. We then ask about your marriage status and any children under 12, to see whether you’re eligible for any tax breaks. Finally, we check whether you would want to opt in or out of a pension scheme.

Once you’ve entered your details, we provide a full calculation with a detailed illustration of all deductions for a range of providers. You have the option to sign up online – but with zero obligation. Essentially, we cut out the sales call process without compromising on the valuable information you receive.

Can we help?

Clarity is crucial when you’re comparing umbrella companies. Fortunately, with Umbrella Broker, you know exactly what you’re getting. Whether it’s our umbrella company calculator, advice in plain English, invaluable resources or full comparison system, we give you the information and top-rated services you need to help you get the most out of contracting.

For more information on our services, contact our team to discuss your options.