Umbrella Pay Glossary
Plain English definitions of every term in umbrella company payroll, IR35, and contractor finance.
A
Assignment Rate
The total amount the recruitment agency pays the umbrella company for your work — the starting point for all deductions.
Apprenticeship Levy
A 0.5% government charge on employers' pay bills above £3 million. Deducted from the assignment rate before gross pay.
Auto-Enrolment
The legal requirement for umbrella companies to automatically enrol eligible workers into a workplace pension scheme.
D
E
P
PAYE
Pay As You Earn — the UK system of deducting income tax and NI at source before wages are paid. All umbrella workers are on PAYE.
Personal Allowance
The amount you can earn before paying income tax — £12,570 for most people in 2026/27.
PSC
Personal Service Company — a limited company owned by a contractor, used to provide their services. The structure IR35 legislation targets.
S
SDS
Status Determination Statement — the document a medium/large end client must issue stating your IR35 status and the reasoning.
Secondary Threshold
The employer NI threshold — £5,000/year in 2026/27. Employer NI applies at 15% on earnings above this amount.
Substitution
One of the three IR35 tests. A genuine contractor can send a qualified substitute in their place; an employee cannot.