Why does my take-home pay look different from my pay illustration?

Wondering why your pay illustration looks different to your first payslip? Here are some common factors that may explain…

Incorrect tax code 

As your umbrella won’t know your tax code until you share your P45, P60 and other relevant documents. Without this information, your pay illustration total will not be completely accurate. Furthermore, it is important to be wary of fraudulent umbrella providers who may tweak your tax code so that your take-home appears higher. 

Income 

Pay illustrations will factor in the whole tax year for your given contract – even if your contract is, say, six months. HMRC  HMRC will consider your contract rate as your annual earnings. Any excess tax you may have paid can be reclaimed. 

Holiday

Holiday pay works differently depending on which umbrella provider you choose to work with. Some offer advanced holiday pay whereas others will accur your holiday pay in a separate holiday ‘pot’ which you can access when needed. Whichever system your employer uses will impact what your payslip looks like (e.g. extra payment for holiday will be displayed if advanced). 

Pension 

Pension deductions are usually left out of the pay illustration as most contractors tend to opt out. However, this obviously makes your total take-home appear bigger than it might be should you choose to stay enrolled on the pension scheme – again, something to bear in mind. 

Expenses 

Some brollies will mitigate expenses from the pay illustration they provide you. Remember, not everyone is eligible to claim, find out more in this useful article. 

Looking for a compliant umbrella? We’re here to help…drop us an email via [email protected] for a pay illustration.