Your Questions, Answered
Frequently Asked Questions
At Mutuality Works, we know that working through an umbrella company can bring up some important questions—especially around pay, deductions, and your rights as a contractor. That’s why we’ve created this FAQ section to give you straightforward answers and help you feel confident in how it all works. Explore below to learn more about your pay, benefits, and what to expect as an umbrella employee.
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At Mutuality Works, we believe payroll should never be complicated or confusing—especially for recruitment agencies and contractors who depend on it. Our UK PEO
At Mutuality Works, we know payroll can come with plenty of questions—whether you’re a contractor exploring employment options or a recruitment agency managing a growing workforce. This FAQ section is here to offer clarity on how our PEO payroll model works, what sets us apart, and how we support both workers and agencies every step of the way. If you still have questions after reading, feel free to get in touch or request a quote—we’re always happy to help.
What is the difference between assignment rate and gross pay?
The assignment rate is the total amount billed by the agency to the umbrella company. Gross pay is what’s left after deductions such as employer National Insurance, pension contributions, and the umbrella margin.
Why is my gross pay lower than the assignment rate I was quoted?
The assignment rate includes employment costs the umbrella company must cover on your behalf, including tax liabilities, pension, holiday pay, and operational fees. Your gross pay is the portion left after these costs.
How is my holiday pay calculated under an umbrella company?
Holiday pay is typically calculated at 12.07% of your gross pay and may either be accrued and paid when you take time off, or advanced and included in your regular payments—depending on the umbrella company’s policy.
Do I still get employment rights with an umbrella company?
Yes. You’re legally an employee of the umbrella company and are entitled to statutory benefits such as sick pay, holiday pay, and workplace pension contributions.
What is the Apprenticeship Levy and does it affect my pay?
The Apprenticeship Levy is a tax paid by employers with a payroll over £3 million. If applicable, this is deducted from the assignment rate before calculating your gross pay. It does not come out of your take-home pay directly.
How do pension contributions work under an umbrella company?
If you’re eligible, your umbrella company must enrol you in a workplace pension scheme. You can opt out if you choose. Both employer and employee contributions are made from the assignment rate.
Can I claim expenses through my umbrella company?
HMRC rules are strict on claiming expenses as an umbrella employee. Most contractors working under Supervision, Direction, or Control (SDC) cannot claim tax relief on expenses unless they are genuinely incurred during travel or outside regular work duties.
Will using an umbrella company affect my tax code or PAYE status?
No, your tax code and PAYE (Pay As You Earn) status remain the same. The umbrella company processes your pay through PAYE, ensuring your taxes and National Insurance contributions are correctly deducted and reported to HMRC.
What is the difference between assignment rate and gross pay?
The assignment rate is the total amount billed by the agency to the umbrella company. Gross pay is what’s left after deductions such as employer National Insurance, pension contributions, and the umbrella margin.
Why is my gross pay lower than the assignment rate I was quoted?
The assignment rate includes employment costs the umbrella company must cover on your behalf, including tax liabilities, pension, holiday pay, and operational fees. Your gross pay is the portion left after these costs.
How is my holiday pay calculated under an umbrella company?
Holiday pay is typically calculated at 12.07% of your gross pay and may either be accrued and paid when you take time off, or advanced and included in your regular payments—depending on the umbrella company’s policy.
Do I still get employment rights with an umbrella company?
Yes. You’re legally an employee of the umbrella company and are entitled to statutory benefits such as sick pay, holiday pay, and workplace pension contributions.
What is the Apprenticeship Levy and does it affect my pay?
The Apprenticeship Levy is a tax paid by employers with a payroll over £3 million. If applicable, this is deducted from the assignment rate before calculating your gross pay. It does not come out of your take-home pay directly.
How do pension contributions work under an umbrella company?
If you’re eligible, your umbrella company must enrol you in a workplace pension scheme. You can opt out if you choose. Both employer and employee contributions are made from the assignment rate.
Can I claim expenses through my umbrella company?
HMRC rules are strict on claiming expenses as an umbrella employee. Most contractors working under Supervision, Direction, or Control (SDC) cannot claim tax relief on expenses unless they are genuinely incurred during travel or outside regular work duties.
Will using an umbrella company affect my tax code or PAYE status?
No, your tax code and PAYE (Pay As You Earn) status remain the same. The umbrella company processes your pay through PAYE, ensuring your taxes and National Insurance contributions are correctly deducted and reported to HMRC.