Umbrella vs limited company on £950 a day
| Inside IR35 (umbrella) | Outside IR35 (Ltd company) | |
|---|---|---|
| Gross contract income | £218,500 | £218,500 |
| Employer NI and levy | −£28,673 | −£1,136 |
| Business expenses | — | −£2,000 |
| Corporation tax | — | −£47,827 |
| Income tax | −£69,111 | −£0 |
| Employee NI | −£5,807 | — |
| Dividend tax | — | −£47,449 |
| Take-home per year | £114,909 | £120,089 |
| Per month | £9,576 | £10,007 |
| Per week | £2,210 | £2,309 |
| Share of gross kept | 52.6% | 55.0% |
Inside IR35 your salary of £189,827 is over £100,000, so the personal allowance is withdrawn at £1 for every £2 above it.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 £202,795 sits in the marginal relief band, so corporation tax works out between 19% and 25% (£47,827 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)
£114,909
£9,576 per month
Tax burden: 47.4%
Gross income£218,500
Employer NI & levy−£28,673
Income tax−£69,111
Employee NI−£5,807
Take home£114,909
Outside IR35 (Ltd Co)· keeps more
£120,089
£10,007 per month
Tax burden: 45.0%
Gross revenue£218,500
Employer NI−£1,136
Expenses−£2,000
Corporation tax−£47,827
Dividend tax−£47,449
Take home£120,089
Annual gross
£218,500
Daily rate
£950
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.