Umbrella vs limited company on £900 a day
| Inside IR35 (umbrella) | Outside IR35 (Ltd company) | |
|---|---|---|
| Gross contract income | £207,000 | £207,000 |
| Employer NI and levy | −£27,130 | −£1,136 |
| Business expenses | — | −£2,000 |
| Corporation tax | — | −£44,455 |
| Income tax | −£64,631 | −£0 |
| Employee NI | −£5,608 | — |
| Dividend tax | — | −£44,250 |
| Take-home per year | £109,632 | £115,160 |
| Per month | £9,136 | £9,597 |
| Per week | £2,108 | £2,215 |
| Share of gross kept | 53.0% | 55.6% |
Inside IR35 your salary of £179,870 is over £100,000, so the personal allowance is withdrawn at £1 for every £2 above it.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 £191,295 sits in the marginal relief band, so corporation tax works out between 19% and 25% (£44,455 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)
£109,632
£9,136 per month
Tax burden: 47.0%
Gross income£207,000
Employer NI & levy−£27,130
Income tax−£64,631
Employee NI−£5,608
Take home£109,632
Outside IR35 (Ltd Co)· keeps more
£115,160
£9,597 per month
Tax burden: 44.4%
Gross revenue£207,000
Employer NI−£1,136
Expenses−£2,000
Corporation tax−£44,455
Dividend tax−£44,250
Take home£115,160
Annual gross
£207,000
Daily rate
£900
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.