Umbrella vs limited company on £700 a day
| Inside IR35 (umbrella) | Outside IR35 (Ltd company) | |
|---|---|---|
| Gross contract income | £161,000 | £161,000 |
| Employer NI and levy | −£20,957 | −£1,136 |
| Business expenses | — | −£2,000 |
| Corporation tax | — | −£31,760 |
| Income tax | −£46,708 | −£0 |
| Employee NI | −£4,811 | — |
| Dividend tax | — | −£31,145 |
| Take-home per year | £88,523 | £94,960 |
| Per month | £7,377 | £7,913 |
| Per week | £1,702 | £1,826 |
| Share of gross kept | 55.0% | 59.0% |
Inside IR35 your salary of £140,043 is over £100,000, so the personal allowance is withdrawn at £1 for every £2 above it.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 £145,295 sits in the marginal relief band, so corporation tax works out between 19% and 25% (£31,760 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)
£88,523
£7,377 per month
Tax burden: 45.0%
Gross income£161,000
Employer NI & levy−£20,957
Income tax−£46,708
Employee NI−£4,811
Take home£88,523
Outside IR35 (Ltd Co)· keeps more
£94,960
£7,913 per month
Tax burden: 41.0%
Gross revenue£161,000
Employer NI−£1,136
Expenses−£2,000
Corporation tax−£31,760
Dividend tax−£31,145
Take home£94,960
Annual gross
£161,000
Daily rate
£700
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.