Umbrella payroll is a popular solution for contractors, combining the freedom of self-employment with the security of full-time employment.
It allows individuals to work on temporary assignments while enjoying the benefits of being an employee of the umbrella company, such as paid holiday, statutory sick pay, and pension contributions.
At QPS, we take this further by offering full salary contracts, providing consistent earnings and enhanced employment rights—unlike traditional umbrella companies that rely on National Minimum Wage (NMW) plus bonuses or commissions.
How does umbrella payroll work?
When you work through an umbrella company, you become its employee. The umbrella company handles:
- Invoicing the recruitment agency or end client for your work
- Collecting payments and processing your payroll
- Deducting tax and National Insurance Contributions (NICs)
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Once these steps are complete, your salary is paid directly to you. At QPS, our full salary contracts provide a transparent and predictable income, offering financial stability alongside the flexibility of contracting.
1. Registering with an umbrella company
Contractors sign up with an umbrella company, such as QPS, which acts as an intermediary between the contractor, recruitment agency, and end client.
When registering with QPS, we’ll confirm your details and outline our company margin and payroll process.
If you’re looking to register as an umbrella employee now, you can do this easily via our Umbrella Payroll Registration Page or over the phone.
2. Payroll processing
The umbrella company calculates deductions from your assignment rate, including:
- Employer costs: NI, pension (if applicable), Apprenticeship Levy, and our company margin.
- Employee costs: PAYE, NI, and pension (if applicable).
3. The contractor gets paid
With QPS Payroll, the contractor receives their net take-home pay directly into their account, along with:
- A text message confirming payment.
- A detailed weekly payslip.
What is an umbrella margin?
An umbrella margin is retained by an umbrella company for its services. This margin retained covers the administrative work involved in managing your payroll, including calculating and processing taxes, National Insurance Contributions (NICs), and pension deductions, as well as ensuring compliance with HMRC regulations.
The margin is deducted from the assignment rate agreed with your agency before your take-home pay is calculated. It’s important to note that the margin retained is not deducted from your gross income but rather from the overall funds paid to the umbrella company.
For example, if your agreed assignment rate is £1,000, the umbrella margin (typically a fixed weekly or monthly amount) is subtracted alongside employer costs such as NI, pension contributions, and the Apprenticeship Levy. The remaining balance is then subject to PAYE, NI, and employee pension deductions to calculate your final net pay.
At QPS, we are transparent about our margin, ensuring you understand exactly how your pay is processed. This information is clearly outlined during registration, so there are no surprises.
What are the benefits of umbrella payroll?
For contractors
- Enjoy the security of full employment benefits, including paid holiday, statutory sick pay, and pension contributions
- Retain the flexibility to work across multiple assignments
- Avoid the administrative burden of running a limited company
For recruitment agencies
- Simplify payroll processes and compliance management
- Receive clear documentation, including KIDs and AWR comparators
- Work with a trusted partner focused on accuracy and efficiency
Who should consider umbrella payroll?
- Contractors working inside IR35:
For assignments classified as inside IR35, umbrella payroll eliminates the complexities of PAYE compliance and tax filings. - Short-term or flexible workers:
Contractors moving between roles can benefit from the continuity of employment that umbrella payroll offers. - Recruitment agencies:
Agencies managing large contractor pools can rely on QPS to streamline payroll processing and ensure compliance with evolving regulations.
Compliance and legal considerations for umbrella payroll
Why choose QPS for umbrella payroll?
The UK government has tightened regulations around umbrella companies to address issues like tax avoidance and worker misclassification. Recruitment agencies and contractors must ensure their chosen umbrella company operates transparently and complies with HMRC and FCSA standards.
Key compliance areas
- FCSA Accreditation:
QPS is proud to be accredited by the FCSA (Freelancer & Contractor Services Association), ensuring adherence to the highest compliance standards for umbrella payroll. This guarantees that contractors and agencies are working with a trusted provider. - PAYE responsibilities:
From April 2026, agencies will bear more accountability for PAYE on contingent workers, requiring robust payroll solutions. - Digital transformation:
Upcoming requirements, like mandatory e-invoicing by 2025, highlight the importance of working with a tech-driven umbrella provider. QPS offers advanced digital solutions to ensure payroll compliance and efficiency.
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For a deeper understanding of compliance standards, visit HMRC PAYE guidance or read about FCSA accreditation.
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As an FCSA-accredited provider, QPS offers unmatched reliability, transparency, and compliance in umbrella payroll.
We combine cutting-edge technology, industry expertise, and a commitment to transparency to deliver exceptional support for contractors and recruitment agencies.
1. Full salary contracts
Unlike many umbrella providers, we offer contracts based on a guaranteed full salary. This approach ensures:
- Predictable income with no reliance on bonuses or variable pay
- Access to comprehensive employment benefits, including holiday pay and pensions
- Greater financial stability while retaining the flexibility to work on diverse contracting assignments
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2. Seamless onboarding
We streamline the onboarding process to make getting started simple and efficient:
- Automated e-signature contracts: Sign contracts quickly and easily with our secure, paperless system.
- Digital Right to Work checks: Use government-certified systems to complete secure and compliant RTW checks in minutes.
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3. Transparent documentation for agencies
Our processes ensure compliance and clarity for recruitment agencies by providing:
- A Key Information Document (KID) during onboarding, outlining employment terms in detail
- An Agency Workers Regulations (AWR) comparator document, ensuring fair treatment and regulatory compliance
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4. Transparent service margin
The margin we retain reflects the value of the services we provide, including payroll management, compliance support, and personalised assistance.Â
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5. Advanced payroll solutions
QPS leverages cutting-edge technology for accurate calculations, secure data handling, and clear payslip management.
Our systems ensure clarity for contractors and ease of compliance for agencies.
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6. Compliance expertise
We adhere to both HMRC and FCSA standards, helping contractors and agencies avoid penalties and reputational risks.
From secure onboarding to ongoing payroll compliance, we are here to support you every step of the way.
With QPS, contractors gain the security and benefits of full-time employment alongside the freedom of contracting, while agencies enjoy seamless compliance management and transparent processes.
