CIS pays a cleared tradesperson the highest headline rate with the lowest on-cost, umbrella sits inside IR35 with statutory benefits and a margin, and permanent PAYE trades the headline rate for pension and allowances. An SC cleared pipefitter at AWE at £320/day on CIS equates to roughly £70,400 a year (elec.training, 2026). Here is how each model works.
Key Takeaways
- CIS pays the highest headline rate, deducts 20% tax at source, and carries no statutory holiday, sick pay or pension.
- Umbrella runs inside IR35 with PAYE tax, statutory holiday and pension, but employment costs of around 14% come out of the assignment rate.
- Permanent PAYE at AWE runs £39,280 to £58,920 with pension and a 9-day fortnight, a lower headline than CIS but with benefits (AWE, 2026).
- Cleared defence rates carry uplifts a commercial rate does not, for example AWE's £1.71/hour second-tier plus £0.75/hour retention on all hours (AWE, 2026).
- The April 2026 umbrella company regulations moved more PAYE compliance liability onto agencies and end clients, so the pay model is now a compliance decision too.
The Three Ways a Cleared Tradesperson Gets Paid
A cleared tradesperson gets paid through one of three models, and each splits the same day rate differently between take-home, benefits and cost. CIS suits self-employed contractors, umbrella covers inside-IR35 assignments, and permanent PAYE is the staff route. Choosing the model sets both the take-home and the total cost to hire.
How does CIS pay work for cleared trades?
CIS pays the highest headline rate and deducts 20% tax at source for registered subcontractors. A cleared pipefitter at £320/day on CIS equates to roughly £70,400 a year across 220 worked days, with tax taken before payment and no statutory holiday, sick pay or pension (elec.training, 2026). The contractor handles their own accounts and National Insurance, which is why experienced cleared trades often favour CIS for the higher gross once qualified. The trade-off is the loss of employment benefits.
How does umbrella pay work for cleared trades?
Umbrella employment runs inside IR35, paying PAYE tax with statutory holiday, pension and sick pay, but the employment costs come out of the assignment rate. A Devonport assignment at £25.65/hour lands nearer £45,000 to £49,000 a year once employer National Insurance, the apprenticeship levy and the umbrella margin are deducted, around 14% of the rate (Morson, 2025). The contractor gains statutory protections and a single PAYE payslip, at a lower net than the equivalent CIS rate. It suits inside-IR35 roles where self-employment is not an option.
What does permanent PAYE offer cleared trades?
Permanent PAYE trades a lower headline rate for pension, allowances and job security. AWE permanent trade and supervisor bands run £39,280 to £58,920 with a company pension, allowances and a 9-day working fortnight (AWE, 2026). The headline is below a CIS day rate, but the package adds employer pension contributions, paid leave and continuity across a multi-year programme. For a cleared trade who values stability over gross rate, permanent staff work on a long programme is the steadier route.
What the April 2026 Umbrella Changes Mean for Cleared Pay
The April 2026 umbrella company regulations changed who is liable for PAYE compliance, and that changes how cleared contract pay is handled. The rules moved responsibility up the chain, so agencies and end clients now carry more of the risk. For a cleared trade and the hiring manager, the pay model is now a compliance decision as much as a rate one.
How do the 2026 umbrella rules affect end clients?
The rules made agencies and end clients jointly responsible for the PAYE compliance of the umbrella companies in their supply chain. That shift means a hiring manager can no longer treat the umbrella as a fully separate party, because the April 2026 umbrella company changes now land on the end client. Clients running cleared contract labour through umbrellas therefore need to know their supply chain is compliant, which is part of why compliant agency supply has become more valuable.
Does IR35 status change the pay model?
IR35 status decides whether a cleared role can run outside on CIS or must sit inside on umbrella. An outside-IR35 role can be paid on CIS at the higher headline rate, while an inside-IR35 role runs through an umbrella on PAYE. The determination is made per assignment by the client, and getting it wrong carries a tax liability. Reviewing the new umbrella company regulations for 2026 alongside the role's status is what keeps a cleared contract compliant.
Which Pay Model Leaves a Cleared Trade Better Off
The best model depends on whether a cleared trade prioritises gross rate or benefits, and on the role's IR35 status. CIS wins on headline take-home, umbrella adds statutory protection, and permanent adds pension and security. The uplifts a cleared role carries then tip the balance.
Is CIS or umbrella better for take-home?
CIS leaves more in the pocket on headline rate, but umbrella adds statutory benefits the CIS rate excludes. A £320/day CIS role at roughly £70,400 a year gross beats an umbrella equivalent on take-home, because umbrella deducts employer costs of around 14% before pay (elec.training, 2026; Morson, 2025). The umbrella contractor gains holiday pay, a pension and a cleaner tax position. For most experienced cleared trades on outside-IR35 work, CIS still wins on net, which is why the cleared roles that command these rates are mostly filled on CIS.
What uplifts do cleared defence rates add?
Cleared defence rates carry programme uplifts a standard commercial rate does not, and they can decide take-home. AWE construction trades attract a £1.71/hour second-tier payment plus a £0.75/hour retention payment on all hours worked, and Devonport umbrella overtime reaches £39.01/hour (AWE, 2026; Morson, 2025). Travelling contractors are usually provided digs, and Saturday and night working attract premium rates. These uplifts, layered on top of the base model, are what hold a cleared trade on a fixed-deadline programme against a competing offer.
How to Structure Pay for a Cleared Trade Role
Structuring cleared pay correctly is what makes an offer land and hold. These four steps set the model before the offer goes out.
Step 1: Determine the IR35 status of the role, since an outside-IR35 role can run on CIS while an inside-IR35 role must sit on umbrella.
Step 2: Benchmark the headline rate to the cleared-market level for the site and trade, not the JIB or NWRA floor.
Step 3: Add the site uplifts, including second-tier, retention and overtime, so the total package competes on take-home.
Step 4: Confirm the umbrella supply chain is compliant, because the 2026 rules place PAYE liability on the agency and end client.
FAQs
Are cleared trades better off on CIS or umbrella?
CIS leaves more on headline take-home because it deducts 20% at source and carries no employment costs, while umbrella removes around 14% for employer National Insurance, the levy and margin before pay (Morson, 2025). Umbrella adds statutory holiday and pension, but most experienced cleared trades on outside-IR35 work favour CIS for the higher net.
How much does an SC cleared pipefitter take home on CIS?
An SC cleared pipefitter at AWE at £320/day on CIS equates to roughly £70,400 a year across 220 worked days, with 20% tax deducted at source (elec.training, 2026). The figure excludes holiday, sick pay and pension, which a CIS contractor funds themselves, and it sits well above the equivalent umbrella net.
What changed for umbrella companies in April 2026?
The April 2026 umbrella company regulations moved PAYE compliance liability onto agencies and end clients, making them jointly responsible for the umbrellas in their supply chain. For a hiring manager running cleared contract labour, that means the compliance of the umbrella is now their concern too, not just the contractor's.
Can a cleared trade role be paid outside IR35?
A cleared role can be paid outside IR35 on CIS only if the client determines the assignment sits outside the rules. Inside-IR35 roles must run through an umbrella on PAYE. The determination is made per assignment, and an incorrect one carries a tax liability, so the status is set before the pay model.
Do cleared defence rates include extra payments?
Cleared defence rates often add programme uplifts a commercial rate does not. AWE construction trades carry a £1.71/hour second-tier plus a £0.75/hour retention on all hours worked, Devonport overtime reaches £39.01/hour, and travelling contractors are usually provided digs (AWE, 2026; Morson, 2025). These uplifts materially change take-home on a cleared assignment.
Scantec runs cleared contract labour on compliant CIS and umbrella models, and can structure a cleared trade role to land the offer and hold it. Brief our cleared defence and MOD trades desk on your requirement at AWE, Devonport, Barrow or Faslane, and we will benchmark the rate and the model together.
About the Author
Peter Bates is Managing Director of Scantec Personnel, the engineering, scientific and manufacturing recruiter that has placed security-cleared contract and permanent trades across UK nuclear and defence sites since 1990, covering CIS, umbrella and PAYE engagements at AWE, Devonport, Barrow and Faslane.
