Umbrella vs limited company on £650 a day
| Inside IR35 (umbrella) | Outside IR35 (Ltd company) | |
|---|---|---|
| Gross contract income | £149,500 | £149,500 |
| Employer NI and levy | −£19,413 | −£1,136 |
| Business expenses | — | −£2,000 |
| Corporation tax | — | −£28,784 |
| Income tax | −£42,228 | −£0 |
| Employee NI | −£4,612 | — |
| Dividend tax | — | −£28,062 |
| Take-home per year | £83,246 | £89,518 |
| Per month | £6,937 | £7,460 |
| Per week | £1,601 | £1,721 |
| Share of gross kept | 55.7% | 59.9% |
Inside IR35 your salary of £130,087 is over £100,000, so the personal allowance is withdrawn at £1 for every £2 above it.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 £133,795 sits in the marginal relief band, so corporation tax works out between 19% and 25% (£28,784 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
£
£
£
AssumptionsOutside IR35: Optimal Ltd Co structure, salary set to personal allowance (£12,570). All remaining profit taken as dividends.
Inside IR35 (umbrella)
£83,246
£6,937 per month
Tax burden: 44.3%
Gross income£149,500
Employer NI & levy−£19,413
Income tax−£42,228
Employee NI−£4,612
Take home£83,246
Outside IR35 (Ltd Co)· keeps more
£89,518
£7,460 per month
Tax burden: 40.1%
Gross revenue£149,500
Employer NI−£1,136
Expenses−£2,000
Corporation tax−£28,784
Dividend tax−£28,062
Take home£89,518
Annual gross
£149,500
Daily rate
£650
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.