Sub banner


Fee Transparency

Fee Transparency

by on September 21, 2023

In the Freelancer and Contractor Services Association’s (FCSA) Code of Compliance Charter, under the ‘Honesty and Transparency’, section, it states that: ‘All fees, margins, and charges must be explicitly and fully disclosed to contractors and freelancers before completion of any contractual relationship’. As proud members of the FCSA that’s something we’re in complete agreement with. However, some other, less scrupulous umbrella companies are less than transparent when it comes to their fees. Here we examine what you should look out for when it comes to choosing your umbrella company.

Less isn’t necessarily more

All services come with a cost – whether that’s paying bank charges or making sure that you’ve taken out holiday insurance – and umbrella companies are no different. However, the value of these charges, or what you actually get for your money, varies vastly from company to company. And the old adage of ‘you get what you pay for’ certainly applies in this situation. 

Let’s consider the different types of fees that umbrella companies charge:

  1. Fixed fees – this is where the company charges you the same amount every week or month regardless of how much you earn. 

  2. Percentage fees – this is where the company will take a percentage of what you earn as their fee. 

Typically, compliant umbrella companies charge, on average, around £15-£25 per week for their services. This amount is usually called a margin, and will not vary substantially. If any umbrella company offers its contractors a rate which is considerably higher or lower than that, it means that a) the company may not be offering value for money, or b) their products will almost certainly be non-compliant i.e. a tax avoidance scheme which will have repercussions in the future when, not if, HMRC discover their practices. 

The amount that umbrella companies charge for their services should be one of the methods of determining which one you choose to be employed by, as the amount they deduct on behalf of HMRC will be a standard amount – Income Tax and National Insurance contributions – which should not vary from company to company. If there is any deviation from the amount a compliant company deducts, it may be a sign that the company is operating a tax avoidance scheme and it should be avoided at all costs.

If you’re a low-paid worker or you work a limited number of hours per week you should consider an umbrella company like Payme which offers capped percentage-based margins. This means that you’re not disproportionately affected by high margins, retain a fairer amount of the money you earn, and are still protected under our full range of employment rights. If you’d like more information about how we can help low-paid or limited hours workers, simply call our helpline. 

Other fees

A compliant umbrella company will never charge you for:

  • Signing up to it or leaving it

  • Processing your timesheets or expenses

  • Paying you the same day

  • Insuring you

  • ‘Additional’ operating costs

Neither will they take part in a process called ‘salary skimming’ which is where additional charges, usually called something along the lines of ‘employment costs’, are deducted from your payslip without your knowledge, or without fully declaring what they are actually for. 

Nor will compliant umbrellas ever withhold your holiday pay, if you’ve decided to receive it on an ‘accrued’ basis. This practice is unethical but not illegal, so it’s vital that you check out a company’s policy on this before you make any commitment to them.

All deductions should be clearly identified as such on your payslip which, at Payme, can be found in your secure online portal. In fact it’s good practice to regularly check your payslip each time you’re paid to ensure that no unauthorised or unidentified sums of money are being deducted from your wage or salary.

Finally, if you’re in any doubt about any amount of money that’s being deducted from your pay, there should be a helpful, knowledgeable customer service advisor at the umbrella company you’re employed by who can explain exactly what the situation is. If you have difficulties contacting them to ask for an explanation it’s a good indication that they are complacent about their levels of customer service, which may also be a sign that they are non-compliant.

We cover this and other topics in our latest guide: Navigating the Storm: Essential Strategies for Choosing the Right Umbrella Company. Click here to request your copy. 

Here at Payme we take great pride in offering high-quality, good-value-for-money products for contractors which are compliant with FCSA standards. You can find out more about how our transparent fees, margins and charges work by calling us on 0333 200 0845, emailing us at, or simply fill in the form here.