How the calculation works
For a temp on your own PAYE payroll, the pay rate is only part of the cost. The calculator adds the employer costs that sit on top of every hour worked:
- Holiday pay at 12.07%. A worker entitled to 5.6 weeks' leave earns holiday at 12.07% of hours worked. Whether you roll it up into the hourly rate or accrue it, the cost is the same and the client is not billed for it separately.
- Employer National Insurance at 15% on weekly earnings above the secondary threshold of £96 a week (£5,000 a year).
- Employer pension at 3% of qualifying earnings between £120 and £967 a week, for workers earning above the £192 a week trigger.
- Apprenticeship Levy at 0.5%, only if your total annual pay bill is over £3 million.
For workers paid through an umbrella company or their own limited company, you pay one invoice rate and the supplier carries the employment costs, so margin is simply the charge rate less the rate you pay. That is not the whole story on risk: since April 2026, an umbrella company's unpaid PAYE can be recovered from your agency. Read our guide to umbrella company liability.
What it leaves out
The Employment Allowance, statutory sick pay, overtime premiums, expenses and any rebates or volume discounts you give the client are not included. Neither is the cost of funding the gap between paying the worker weekly and being paid by the client. For that, use the cash gap calculator.
Want this for every placement, every month?
Our margin per desk reporting does this calculation across your whole contract book, from your actual pay runs, and splits it by consultant and client. Our contractor payroll service allocates employer costs back to each placement automatically.
This calculator gives an estimate for general information using 2026/27 UK rates. It is not advice on your specific circumstances. Rates and thresholds change, so check before relying on the result for pricing decisions.