The Modern UK Accounting Service For Contractors, Freelancers & Creators
Free calculator ·

Contractor take-home pay calculator

Limited company vs umbrella, side by side — see what you’d keep from your day rate outside IR35 through your own company, or inside IR35 through an umbrella, using this year’s tax rates.

An annual estimate for England, Wales and Northern Ireland, with no other personal income or student loans. Compare a sole-director company outside IR35 with weekly umbrella pay. Both figures show cash after costs and the same pension contribution. Read the assumptions.

Your details

Use the assignment rate for the umbrella comparison, before its employment costs.
46 allows for holidays and gaps. Umbrella earnings are paid in these weeks, with holiday pay included.
Applied to both options: an allowable company expense before tax, or a cost paid from umbrella take-home. Exclude salary, pension and accountancy fees.
Employer contribution through your company; agreed salary sacrifice through the umbrella. No other auto-enrolment contributions included. Check pension limits and assumptions.
Enter your provider’s weekly charge.
Company and umbrella settings
Choose No if VAT is an extra cost. VAT returns and the Flat Rate Scheme are outside this estimate.
Companies under common control can share corporation-tax thresholds. Exclude the company being calculated.

Limited company vs umbrella: which pays more in ?

For work outside IR35, a limited company can give you more flexibility over salary, dividends and pension contributions. Whether it leaves you better off depends on your income and the costs of running the company. Your IR35 status comes from the engagement itself; it isn’t something this comparison decides.

You don’t have to take all the profit out each year. The company still pays corporation tax on its taxable profits, but you can leave the remaining money in the company and choose how much to pay yourself as dividends, and when. Spreading dividends across tax years may reduce your personal tax bill by making better use of allowances and tax bands, depending on your other income and the rates at the time. This calculator assumes all remaining profit is paid out in the same tax year, so it doesn’t show any benefit from retaining profits.

An umbrella is a common route for inside-IR35 work. Its assignment rate covers employment costs as well as your gross salary. Pension contributions can receive tax relief through either arrangement. Some employee expenses can also qualify for relief, although ordinary commuting and intermediary travel have particular restrictions.

How the limited company figure is worked out

Allowable expenses, our fee, employer pension contributions, salary and employer NI are deducted from contract income. The salary starts at up to and is reduced if the income cannot fund it. Corporation tax is calculated on the remaining profit, including marginal relief where applicable. The profit after tax is paid as dividends, with personal tax calculated on salary and dividends together.

How the umbrella figure is worked out

Your weekly assignment income funds the umbrella margin, the pension contribution you entered, employer NI, any apprenticeship levy and your gross salary. Employee NI uses weekly earnings and thresholds. Income tax is estimated for the whole tax year. The same monthly business costs used in the company comparison then come off net pay. This estimate includes holiday pay in the weeks paid; a provider that retains holiday pay or pays monthly can produce different figures.

Who these figures are for

The monthly business-cost figure is applied to both options. It is treated as an allowable company expense and a cost paid personally through the umbrella. Include any irrecoverable VAT in your estimate. We do not adjust for differences in VAT recovery between the options, umbrella reimbursements or employee expense tax relief.

A UK-resident trading company with a twelve-month accounting period, a sole director/shareholder appointed for the full tax year, and no other employees liable for employer NI. No Employment Allowance is claimed. All entered company costs are assumed deductible; augmented profits equal taxable profits. The associated-company setting adjusts the corporation-tax thresholds. Existing reserves, historic losses, investment income and VAT liabilities are outside this model. Dividends must be supported by distributable reserves.

Personal tax uses England, Wales and Northern Ireland bands for , with no other income, benefits in kind, student loans or other personal tax charges. Umbrella NI uses category A. The figures do not establish a lawful minimum wage, holiday-pay arrangement or IR35 status. They estimate annual tax, not payment dates or payments on account.

Pension assumptions

The same annual employer pension contribution is funded in both columns. For the umbrella this assumes an agreed salary-sacrifice arrangement, with no additional auto-enrolment deductions. Check the provider’s terms and minimum-wage limits. Company pension relief assumes a contribution paid wholly and exclusively for the trade.

The standard annual allowance is across your pensions, including employer contributions. Carry-forward may allow more; high income or flexible pension access can reduce the allowance. Pension allowance charges are excluded, so check your own available allowance before relying on the figures. HMRC pension allowance guidance.

These are estimates for guidance; payroll rounding can create small differences. Talk to us about your own position. Rates checked against HMRC payroll guidance, dividend rates and corporation-tax guidance.

Take-home pay questions

How much does a contractor take home through a limited company?
It depends on your contract income, allowable expenses and pension contributions. The calculator deducts company costs and taxes, then personal tax on salary and dividends. It assumes you're the sole director and shareholder, working outside IR35 with no other personal income.
How does umbrella take-home pay work?
Your assignment rate funds the umbrella's margin, employer National Insurance, any apprenticeship levy and employer pension contribution. The remaining salary is subject to income tax and employee NI. This calculator assumes weekly pay and includes holiday pay in those paid weeks. Your actual payroll arrangements can change the result.
Do pension contributions get tax relief through an umbrella?
Yes. Umbrella workers can receive pension tax relief. This calculator assumes your umbrella agrees to salary sacrifice and puts the same annual amount into your pension as your limited company would. Check the arrangement with your provider: salary sacrifice must not reduce cash pay below minimum wage. Pension allowance charges are not included.
What's the difference between inside and outside IR35?
Outside IR35, you can take salary and dividends through your company. Inside IR35, the income is taxed under employment rules; an umbrella is one common route. The calculator compares those two scenarios. It does not determine your IR35 status or make it a choice.
What salary and dividends does the calculator assume?
It starts with a director salary up to the standard personal allowance, reducing it if contract income cannot fund the salary, employer NI and company costs. Remaining profit after corporation tax is paid as dividends. Existing company funds and historic losses are not included; dividends must be supported by distributable reserves. Your best salary and dividend mix may differ.

Talk through your numbers with us.

Company formation, FreeAgent, payroll, dividends and your self-assessment — handled by your own dedicated accountant for one simple monthly fee.

Get in touch See pricing