Every worker, including an umbrella employee, is entitled to 5.6 weeks of paid holiday a year by law. The common confusion is where the money comes from: holiday pay is funded from your assignment rate, not added as a bonus. So it is already part of the gross figure an umbrella quotes — the question is only whether you receive it as you go, or later.
Where 12.07% comes from
The figure 12.07% is simply 5.6 weeks of holiday divided by the 46.4 weeks you actually work (52 − 5.6). It is the proportion of your working pay that represents holiday entitlement. An umbrella calculates your holiday pay as 12.07% of your gross taxable salary.
Rolled-up vs accrued
- Rolled-up: the umbrella pays your holiday pay in every payment, shown as a separate line. You get it as you earn it — convenient, but you must budget for the weeks you take off, because there is no separate pot to draw from.
- Accrued (held): the umbrella holds your holiday pay back and releases it when you book leave, or pays any balance when your assignment ends. Make sure you claim it — unclaimed accrued holiday pay is a common way contractors lose money.
Either way the annual total is the same; only the timing differs. Our umbrella take-home calculator includes holiday pay in your gross so the take-home is the true annual figure.
Limited company contractors
If you work outside IR35 through your own limited company, there is no separate holiday pay — you are a director paying yourself from company profit, so "holiday" simply means days you do not invoice. That is why honest billable days (around 220 a year) matter so much when you plan your income.
General guidance for 2026/27, not employment-law or tax advice. Holiday-pay rules can change; check your Key Information Document, your umbrella's policy and gov.uk for the current position.