Pay via an Umbrella Company


I have a question regarding the way that I receive my pay each week.

I work as a locum and get paid via an umbrella company as I do not have an employer. I am not directly employed by the NHS and work temporary contracts via an agency. However the umbrella company say that they are your employer and produce your payslips and cover your insurance.

Whilst recieving my pay through an umbrella company, I end up paying 2 sets of National insurance. I have to pay employers and employees NI. This results in my only taking home around 60% of my pay. I worked in July and recieved 60% of my total pay, even though I did not pay tax for 3 weeks (this is because I have been on maternity leave and it is the first month I have worked since the start of the tax year) so once I start paying 20% tax I will recieve even less pay.

I have contacted another umbrella company and I have been informed that they can offer me a better rate of take home pay and as my employers they will pay the employers NI. So I only have to pay employees NI.

The way in which they will pay me will be in two payments. One is where I will pay tax and NI on minimum wage and the remainder will be payed to me by my employer as an advance payment, therefore I won’t need to pay tax and NI on the remainder of my pay.

So for example If I earn £1000 a week. I will pay tax and NI on £300 and receive the remainder as an advance payment of £700.

Due to this advance payment the employer will pay 2.5 percent interest.

At the end of the tax year I will pay 0.5 % in Benefit in kind tax, for receiving these advance payments.

The umbrella company have informed me that they are compliant with HMRC. My question is that is this sharia compliant? I will not be paying or receiving interest, however my employer will be paying 2.5% interest as a result of processing my timesheet.

Jazakallah Khair


May Allah bless you.
As far as I am aware, benefit in kind tax is usually paid on loans, and not on advanced payments. I have the feeling that, the payments are loans given to you which they will probably classify as write off later on.
Can you double check this for me please?

Kind regards


I have spoken to the company and they are saying that they don’t like to refer to an advance payment as a loan.

However a colleague uses the company and has mentioned that yes it is a loan.

JazakAllah Khair

I personally don’t think this is permissible as you are assisting in creating interest bearing contracts, even if you are not paying or receiving interest.
However, I have been paid through Umbrella companies before, and the delays in payment can be unacceptable at times.
My advice is, to stay with them at the moment and keep looking for another alternative that is convenient and less doubtful from an Islamic point.
I think there is a company called Simplify business based in Sheffield. Try to see what they offer and let me know inshaAllah

And Allah knows best!

JazakAllah for that.

I am happy to stay with my current umbrella company at the moment but I will look at other options. I contacted my agency and they gave me a list of companies to contact to see what my take home pay would be and they all the companies pay around the same amount. I have spoken with simplify and they have said they work with businesses and recruitment agencies only.

JazakAllah khair for your help.