Check your payslip is correct if you work through an umbrella company
Source: gov.uk (2025-12-03)

Find out how to spot signs of disguised renumeration tax avoidance on your payslip and get help and support.

Many umbrella companies follow the tax rules, but some do not.

Some claim that:
- their tax arrangements or tax avoidance schemes are HMRC approved
- you will take home a higher percentage of your pay
If an umbrella company tells you that some of your employment income is not taxable, this could be a sign of tax avoidance.

HMRC does not approve or endorse any umbrella companies or tax avoidance schemes — you are responsible for making sure you pay the right amount of tax and National Insurance.

While you check your payslip, you can also use the HMRC tool to help you work out pay from an umbrella company (https://www.gov.uk/guidance/work-out-pay-from-an-umbrella-company).

What to look for on your payslip

As an employee working through an umbrella company, you need to know what to look out for on your payslip. This will help you work out if you’re involved in a tax avoidance scheme.

Check your payslip has the correct:
- hourly rate of pay
- hours worked
- gross and net (take home) pay
- deductions from your salary
These can often look correct on your payslip, so you’ll also need to look for these on your reconciliation and pay statements.

Be aware that some deductions on your payslip might be grouped together. This can hide the true amount of tax and National Insurance you’re paying.

Look for signs of extra payments

Look out for:
- extra payments into your bank account
- text messages telling you about a separate amount of money
- payments not processed through PAYE — check your reconciliation statement, or a payment sent to your bank account
- a high umbrella company fee — look on your payslip to find this fee
These payments might be described as:
- loans
- annuities
- bonuses
- profit shares
- fiduciary receipts
- credit facilities
- capital payments
- pay advances
Your payslip may:
- show only the payments paid through PAYE — to make it look compliant with the tax rules
- not show all the payments made by the umbrella company — if they involve different types of payments
You should also check:
- the renumeration section of your assignment contract
- your contract of employment for these types of payments — as they may be legitimate if taxed
Look for an umbrella company fee

Umbrella companies charge a margin (fee) each time they process your pay to cover the costs of using their services.

Look out for a high umbrella company fee (or margin). Umbrella companies that operate tax avoidance schemes will often charge higher fees than legitimate umbrella companies.

This fee should be disclosed when you signed your contract.

Check for this fee on your:
- payslip
- reconciliation statement
- pay statement
This may be tax avoidance when:
- the fee or margin value is similar to the tax or National Insurance contributions you should be paying
- the umbrella company keeps a much larger margin than other companies
- deductions are grouped together on your payslip
This fee does not contribute to your tax or National Insurance contributions payments.

You can ask for:
- a breakdown of your deductions to help you understand what they’re for
- a key information document (https://www.gov.uk/guidance/key-information-document-guidance-for-agency-workers-paid-through-umbrella-companies) if you’re working though an agency — this will provide you with the deductions and fees, your assignment and contract rates, and how they affect your gross and net pay
Check the payslip examples to help you

Every payslip is different, but we have included some examples of what to look for on your payslip that could be a sign of tax avoidance.

You can use the Payslip and reconciliation statement examples (https://assets.publishing.service.gov.uk/media/69303a2a5b5198836f303fbd/Payslips_and_reconciliation_statement_examples_2025.odt) (ODT, 27 KB) to help you identify the example of disguised remuneration tax avoidance, including a summary of some common key terms.

Example of a correct payslip

This is an example of the figures you’d expect in the income section on a correct weekly payslip.

The table shows what you’d see in the income section.

The rate of pay is £18.89 an hour (reduced from £25 assignment rate due to company costs and holiday pay).

You pay tax and National Insurance contributions on the total gross pay.

The table shows what you’d see in the deductions section.

The total deductions of £178.06 are taken from the gross pay of £783.09 leaving a net pay (take home pay) of £605.03.

Example of a payslip involving tax avoidance

In this example, more money was paid into the bank account (an extra £204.29) than was shown as net pay on the payslip. This is a clear sign of tax avoidance.

The table shows what you’d see in the income section.

The rate of pay is the National Living Wage (NLW) rate of £12.21. The payslip shows that tax and National Insurance contributions are paid on the total gross pay.

The table shows what you’d see in the deductions section.

The total deductions of £89.39 are taken from the gross pay of £506.30 leaving a net pay of £416.91.

Why this payslip shows tax avoidance

The correct amount of tax and National Insurance was taken based on the gross pay shown on the payslip. To make the payslip look compliant, the employer used the NLW rate instead of the correct £25 hourly rate.

The rest of the salary (an extra payment of £204.29 not shown on the payslip) was paid directly into the employee’s bank account without any tax or National Insurance deductions.

This suggests a disguised remuneration tax avoidance scheme was used, because:
- you pay less tax and National Insurance — the employer uses the lower NLW rate
- your gross pay is reduced lowering the amount of tax and National Insurance taken
- the extra payment of £204.29 is paid into your account but does not appear on your payslip and is not part of the PAYE calculations — tax and National Insurance might still be owed on this hidden payment
The extra payment into your account could either be:
- paid separately
- combined with the £416.91 salary as a single salary payment
How this affects you

The effects of tax avoidance mean:
- your pension contributions are less
- the employers pension contributions are less
- your future pension payments will be less at retirement
What happens if you use a tax avoidance scheme

Using an umbrella company that claims you’ll be able to take home a higher percentage of your pay is very risky.

If we find that you’ve been using a tax avoidance scheme, you may be liable to pay:
- the tax and National Insurance contributions that are legally due
- interest on tax legally due
- any associated penalty
These payments are in addition to any fees that you have paid to those selling the scheme.

Check a list of the named tax avoidance schemes (https://www.gov.uk/government/publications/named-tax-avoidance-schemes-promoters-enablers-and-suppliers) we know about.

Get help and support

If you’re concerned about a scheme you’re using, you can:
- get independent professional tax advice (https://www.gov.uk/tax-help)
- contact HMRC by email: xxx@xxx.xx (mailto:xxx@xxx.xx)
You can also read guidance on the Money Helper website (https://www.moneyhelper.org.uk/en/work/employment/understanding-your-payslip) about understanding your payslip.

Reporting tax avoidance

You should report any tax avoidance arrangements to HMRC (https://www.gov.uk/report-tax-fraud).

Add the reference ‘TAC’ when you describe the activity on the online form or give this reference when you call.