Umbrella company or limited company: how architecture contractors are paid

Temporary architecture staff are usually paid in one of two ways: as an employee of an umbrella company, or through a limited company they own. Which one applies depends mostly on the IR35 rules and the way the work is done, not on which pays more on paper.

Working through an umbrella company

An umbrella company employs you for your assignments. The practice pays for your hours, the umbrella company receives the assignment rate and pays you through PAYE like any employer. You get employee rights with the umbrella company, including holiday pay, statutory sick pay and automatic pension enrolment, and a payslip every pay period.

The assignment rate is not your gross pay. Before you are paid, the umbrella company takes out its employer costs, such as employer National Insurance and employer pension contributions, and its own fee. Holiday pay is either paid as you go or held until you take leave. Your own Income Tax, National Insurance, pension contributions and any student loan come out after that.

Before you agree terms, the agency must give you a key information document showing the rate, each deduction and an example of your take-home pay. Check your payslip against it, and use HMRC's umbrella pay tool if something looks wrong.

Why the umbrella company matters

Since 6 April 2026 the agency that supplies you to a practice is responsible for making sure the umbrella company operates PAYE correctly. That gives agencies a reason to work only with umbrella companies they trust. Be wary of any offer of take-home pay that looks far higher than other quotes for the same rate: HMRC sets out the rules, and a scheme that does not pay the right tax can leave you owing it.

Working through your own limited company

With a limited company, your company invoices for your work and you pay yourself from it. You are responsible for the company's accounts, Corporation Tax, VAT if it is registered, insurance and usually an accountant. You do not get employee rights such as holiday pay or sick pay from the practice or the agency.

IR35 decides most of this

The off-payroll working rules, known as IR35, ask whether you would be an employee if the practice took you on directly. If you would, the assignment is inside IR35 and Income Tax and National Insurance have to be deducted from what your company is paid, much as they would be for an employee. That removes most of the reason to use a limited company.

A medium or large practice decides your IR35 status itself and gives you a status determination statement with its reasons. A small practice leaves the decision to your company. Size is judged on turnover, balance sheet and number of employees; GOV.UK explains the tests.

What this means in architecture practice

Most temporary roles in practices involve working as part of the team, on the practice's projects, under its direction and often in its office. Those features usually point to inside IR35, which is why umbrella employment is the normal route for our temps. If you work through your own company and expect an assignment to be outside IR35, tell us before anything is agreed and we will talk it through with you and the practice.

Our contract and IR35 calculator compares take-home pay on each route for the same rate.