Umbrella Payroll Made Easy
Hassle-free pay for contractors and freelancers with paiyroll®
If you’re running an umbrella company or recruitment agency, you know that processing umbrella payroll isn’t like running a typical PAYE payroll. With layers of deductions, manual calculations, and compliance risks, it’s no wonder 95% of payroll software can’t do it—or can’t do it well.
But there’s good news. With paiyroll®, umbrella payroll can be 100% automated, accurate, and stress-free.
Benefits of Automated Umbrella Payroll
UMBRELLA &
RECRUITMENT COMPANIES
Cuts admin time
Reduces compliance risk
Scalable to any size business
contractors &
freelancers
Transparent, real-time payslips
Hassle-free payment with no disputes
Flag errors before payday
What is Umbrella Payroll?
Umbrella payroll is a structure where a third party—usually an umbrella company—acts as the employer for contractors. This allows the contractor to avoid managing their own tax, while still working on short-term assignments through recruitment agencies.
Because of the layered deductions and specific order in which they must be applied, umbrella payroll is far more complex than standard payroll. And most payroll software are not designed to handle it.
The umbrella company is responsible for deducting and paying:
Employer National Insurance (NI)
Apprenticeship Levy
Workplace Pension Contributions
Their own margin or management fee
Employee Tax and NI
Complexities of Umbrella Payroll
In umbrella payroll, the contractor’s rate includes more than just their salary—it must also cover the employer’s costs. That means you need to:
- Calculate employer NI and the Apprenticeship Levy before working out gross pay.
- Deduct the umbrella company’s margin.
- Then calculate employee tax, NI, and pension contributions.
- All while ensuring full compliance with HMRC and workplace pension regulations.
Many payroll teams resort to manual workarounds or separate spreadsheets to make it work. That’s time-consuming, error-prone, and unsustainable as you scale.
paiyroll® Automates Umbrella Payroll in Real-Time
paiyroll® is one of the only payroll platforms on the market that fully supports umbrella payroll.
The entire payroll is processed continuously with no batch runs, no spreadsheets, and no manual calculations. Contractors get total visibility into how their pay is calculated, and your team spends less time on admin and compliance.
This means payroll professionals never have to check whether pensions were submitted or approved—it’s already done.
Using our advanced AI-driven software, paiyroll® automates:
Employer NI and Apprenticeship Levy calculations
Umbrella margin/fee deductions
Employee PAYE, NI, and pension deductions
The correct sequence of all deductions
Live payslips showing deductions in real time
paiyroll® Real-Time Payslip for Umbrella Pay
Once set up, paiyroll® automatically calculates live pay, even before payday. Taking into account all relevant pay contributions, deductions, salary rates, pay changes and bonuses, in accordance with the latest UK legislation. This means pay is always compliant.
Employees get full transparency into their pay as can view their payslips via self service and flag any administrative errors before payday. This means pay is always accurate.
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Payroll in Zero minutes
100% automated payroll for all pay elements, incl. holiday pay, tax codes, salary pro-rata, NI and NMW.
Works with API or upload any spreadsheet (no edits needed!).
Payroll processing time is reduced by 75%, saving you 3 days a week!
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