Umbrella vs limited company on £500 a day
| Inside IR35 (umbrella) | Outside IR35 (Ltd company) | |
|---|---|---|
| Gross contract income | £115,000 | £115,000 |
| Employer NI and levy | −£14,784 | −£1,136 |
| Business expenses | — | −£2,000 |
| Corporation tax | — | −£20,334 |
| Income tax | −£27,540 | −£0 |
| Employee NI | −£4,015 | — |
| Dividend tax | — | −£18,750 |
| Take-home per year | £68,661 | £72,781 |
| Per month | £5,722 | £6,065 |
| Per week | £1,320 | £1,400 |
| Share of gross kept | 59.7% | 63.3% |
Inside IR35 your salary of £100,216 is over £100,000, so the personal allowance is withdrawn at £1 for every £2 above it. Between £100,000 and £125,140 that works out as a 60% marginal rate, which is why pension contributions are worth a close look at this rate.
Outside IR35 your company profit of £99,295 sits in the marginal relief band, so corporation tax works out between 19% and 25% (£20,334 in total).
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
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AssumptionsOutside IR35: Optimal Ltd Co structure, salary set to personal allowance (£12,570). All remaining profit taken as dividends.
Inside IR35 (umbrella)
£68,661
£5,722 per month
Tax burden: 40.3%
Gross income£115,000
Employer NI & levy−£14,784
Income tax−£27,540
Employee NI−£4,015
Take home£68,661
Outside IR35 (Ltd Co)· keeps more
£72,781
£6,065 per month
Tax burden: 36.7%
Gross revenue£115,000
Employer NI−£1,136
Expenses−£2,000
Corporation tax−£20,334
Dividend tax−£18,750
Take home£72,781
Annual gross
£115,000
Daily rate
£500
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.