Holiday Pay & Umbrella Companies
How the 12.07% statutory holiday entitlement works — rolled-up vs accrued, and why it matters for your take-home pay.
Last updated: April 2026
Your Statutory Entitlement
All UK workers — including contractors working through an umbrella company — are entitled to 5.6 weeks of paid holiday per year under the Working Time Regulations 1998. For a typical full-time contractor working 5 days a week, that is 28 days (5.6 × 5).
The holiday entitlement is expressed as a percentage of the time you work: 12.07%. This figure comes from:
Holiday Pay Rate Calculation
Annual weeks: 52
Holiday weeks: 5.6
Working weeks: 52 − 5.6 = 46.4
Rate = 5.6 ÷ 46.4 = 12.07%
Two Methods: Rolled-Up vs Accrued
Umbrella companies pay holiday pay in one of two ways. The method used significantly affects when you receive the money and how you should budget.
| Rolled-Up | Accrued (Holiday Pot) | |
|---|---|---|
| How it works | 12.07% added to every payslip | Held in a pot, paid on request |
| When you receive it | Each pay period (weekly/monthly) | When you take leave |
| Time off periods | No extra pay — already received | Claim from pot when needed |
| Risk | Easy to spend — budget carefully | Unclaimed pay may be lost at year-end |
| Legality | Legal since Harpur v Brazel (2022) | Always legal |
| Most common? | Yes — most umbrella companies | Less common |
Impact on Your Take-Home Pay
With rolled-up holiday pay, your umbrella company adds 12.07% to your gross salary before income tax and NI are calculated. This increases your gross — which is good — but also means slightly more of your income may be taxed at higher rates if you are a higher-rate taxpayer.
Here is the effect on a typical £500/day rate (48 weeks, 5 days/week):
| Day Rate | Annual Assignment | Holiday Pay (12.07%) | Gross incl. Holiday |
|---|---|---|---|
| £300/day | £72,000 | +£7,309 | £67,861 |
| £400/day | £96,000 | +£9,745 | £90,481 |
| £500/day | £120,000 | +£12,181 | £113,101 |
| £600/day | £144,000 | +£14,617 | £135,721 |
| £700/day | £168,000 | +£17,053 | £158,341 |
Gross is approximate — after employer NI (15%) and apprenticeship levy (0.5%) deducted from assignment rate. Actual figures depend on umbrella margin.
What to Check on Your Payslip
Your payslip should clearly identify the holiday pay component. Look for:
- "Holiday Pay (Rolled Up)" — a separate line showing the 12.07% addition
- "Gross Pay" — should include the holiday component before tax
- If you are on an accrued model, look for a "Holiday Pay Balance" or similar accrual statement
If your payslip does not identify holiday pay at all, raise this with your umbrella company — you may be missing statutory entitlements.
See all umbrella company deductions →
HMRC: Holiday entitlement and payCalculate Your Take-Home
Our calculator includes holiday pay in the gross calculation automatically.
Use Calculator2026/27 Rate
12.07% of gross pay
5.6 weeks statutory entitlement