Umbrella vs limited company on £750 a day
| Inside IR35 (umbrella) | Outside IR35 (Ltd company) | |
|---|---|---|
| Gross contract income | £172,500 | £172,500 |
| Employer NI and levy | −£22,500 | −£1,136 |
| Business expenses | — | −£2,000 |
| Corporation tax | — | −£34,814 |
| Income tax | −£51,189 | −£0 |
| Employee NI | −£5,011 | — |
| Dividend tax | — | −£34,468 |
| Take-home per year | £93,800 | £100,082 |
| Per month | £7,817 | £8,340 |
| Per week | £1,804 | £1,925 |
| Share of gross kept | 54.4% | 58.0% |
Inside IR35 your salary of £150,000 is over £100,000, so the personal allowance is withdrawn at £1 for every £2 above it.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 £156,795 sits in the marginal relief band, so corporation tax works out between 19% and 25% (£34,814 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.
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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)
£93,800
£7,817 per month
Tax burden: 45.6%
Gross income£172,500
Employer NI & levy−£22,500
Income tax−£51,189
Employee NI−£5,011
Take home£93,800
Outside IR35 (Ltd Co)· keeps more
£100,082
£8,340 per month
Tax burden: 42.0%
Gross revenue£172,500
Employer NI−£1,136
Expenses−£2,000
Corporation tax−£34,814
Dividend tax−£34,468
Take home£100,082
Annual gross
£172,500
Daily rate
£750
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.