Umbrella vs limited company on £250 a day
| Inside IR35 (umbrella) | Outside IR35 (Ltd company) | |
|---|---|---|
| Gross contract income | £57,500 | £57,500 |
| Employer NI and levy | −£7,067 | −£1,136 |
| Business expenses | — | −£2,000 |
| Corporation tax | — | −£7,941 |
| Income tax | −£7,605 | −£0 |
| Employee NI | −£3,019 | — |
| Dividend tax | — | −£3,586 |
| Take-home per year | £39,808 | £42,838 |
| Per month | £3,317 | £3,570 |
| Per week | £766 | £824 |
| Share of gross kept | 69.2% | 74.5% |
Inside IR35 your salary of £50,433 crosses the £50,270 higher-rate threshold, so everything above it is taxed at 40% plus 2% employee NI.
Outside IR35 your company profit of £41,795 is under £50,000, so it pays the 19% small profits rate of corporation tax.
These figures assume 5 days a week for 46 weeks, no pension contributions, umbrella margin not deducted, and for the Ltd company a £12,570 salary with the rest taken as dividends and £2,000 of expenses. Change any of them in the calculator below.
Your details
£
£
£
AssumptionsOutside IR35: Optimal Ltd Co structure, salary set to personal allowance (£12,570). All remaining profit taken as dividends.
Inside IR35 (umbrella)
£39,808
£3,317 per month
Tax burden: 30.8%
Gross income£57,500
Employer NI & levy−£7,067
Income tax−£7,605
Employee NI−£3,019
Take home£39,808
Outside IR35 (Ltd Co)· keeps more
£42,838
£3,570 per month
Tax burden: 25.5%
Gross revenue£57,500
Employer NI−£1,136
Expenses−£2,000
Corporation tax−£7,941
Dividend tax−£3,586
Take home£42,838
Annual gross
£57,500
Daily rate
£250
Working days/yr
230
Estimates only. Inside IR35 assumes an umbrella company deducts employer NI and the apprenticeship levy, before its own margin. Outside assumes a £12,570 Ltd Co salary. Individual circumstances vary — consult a contractor accountant for personalised advice.