Umbrella vs limited company on £600 a day
| Inside IR35 (umbrella) | Outside IR35 (Ltd company) | |
|---|---|---|
| Gross contract income | £138,000 | £138,000 |
| Employer NI and levy | −£17,870 | −£1,136 |
| Business expenses | — | −£2,000 |
| Corporation tax | — | −£25,888 |
| Income tax | −£37,497 | −£0 |
| Employee NI | −£4,413 | — |
| Dividend tax | — | −£24,986 |
| Take-home per year | £78,220 | £83,990 |
| Per month | £6,518 | £6,999 |
| Per week | £1,504 | £1,615 |
| Share of gross kept | 56.7% | 60.9% |
Inside IR35 your salary of £120,130 is over £100,000, so the personal allowance is withdrawn at £1 for every £2 above it.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 £122,295 sits in the marginal relief band, so corporation tax works out between 19% and 25% (£25,888 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)
£78,220
£6,518 per month
Tax burden: 43.3%
Gross income£138,000
Employer NI & levy−£17,870
Income tax−£37,497
Employee NI−£4,413
Take home£78,220
Outside IR35 (Ltd Co)· keeps more
£83,990
£6,999 per month
Tax burden: 39.1%
Gross revenue£138,000
Employer NI−£1,136
Expenses−£2,000
Corporation tax−£25,888
Dividend tax−£24,986
Take home£83,990
Annual gross
£138,000
Daily rate
£600
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.