Assignment Rate vs Day Rate: What's the Difference?
A crucial distinction that affects your entire umbrella pay calculation — explained clearly.
Last updated: April 2026
The Quick Definition
Day Rate
The amount you negotiate with the end client or recruitment agency — typically expressed as a daily figure (e.g. £500/day).
Assignment Rate
The total amount the agency pays the umbrella company — from which all deductions (employer NI, levy, margin) are calculated.
In Most Cases, They Are the Same
For the majority of UK contractors, the day rate and assignment rate are identical. When you agree £500/day with an agency, the agency typically pays the umbrella company £500/day — and all umbrella deductions (employer NI, apprenticeship levy, margin) come out of that £500.
This is why your gross salary is significantly lower than your day rate — it's the day rate minus employer NI, levy, and margin, not the day rate itself.
When They Differ: The "Total Cost" Approach
Some recruitment agencies — particularly those with more transparency — quote a "total cost" or "bill rate" as the assignment rate, which includes employer NI and levy on top of your negotiated day rate. This is less common but does occur.
Important: Always Clarify With Your Agency
Always ask your agency: "Is the £500/day the total amount you will pay the umbrella, or is it the amount before employer costs?" This single question can significantly affect your take-home pay calculation.
How This Affects Your Calculator Inputs
When using our umbrella pay calculator:
- Enter the assignment rate — the total amount the agency pays the umbrella company per day
- If your agency quotes a rate before employer costs, the actual assignment rate will be slightly higher
- If uncertain, use the day rate you negotiated — this is correct in most cases
The calculator then deducts employer NI, apprenticeship levy, and umbrella margin from this rate to arrive at your gross salary, then calculates income tax and employee NI on the gross salary.
Example: Same Day Rate, Different Assignment Rates
In both cases the net take-home should be similar — the difference is whether employer costs are embedded in your day rate or added separately.