Tax calculators · Contractors
Outside IR35, a limited company usually leaves you a few thousand pounds a year better off than an umbrella. Enter your day rate to see the exact difference, after every tax and cost.
Not sure about IR35, or whether a company is worth it for you? We set up and run limited companies for contractors, and we'll give you a straight answer first.
Book a free 30-minute callThese calculators give estimates based on the figures you enter and the 2026/27 rates shown for England, Wales and Northern Ireland. They are not personal tax advice. Please speak to us before acting on the results.
Umbrella: the umbrella company takes its margin, then pays employer National Insurance and the 0.5% apprenticeship levy out of your contract income before working out your gross pay. You're then taxed like any employee, with income tax and employee National Insurance taken through PAYE.
Limited company: your company pays its running costs and corporation tax, and you take the most tax-efficient mix of salary and dividends. This version assumes you take everything out each year. Many contractors leave some profit in the company, which widens the gap further.
If the contract is inside IR35, the fee-payer taxes you much like an employee, and a limited company usually leaves you no better off than an umbrella once you add the running costs.
Example: £450 a day, 5 days a week for 46 weeks, outside IR35. Through an umbrella you keep about £62,446 a year. Through your own company, after £2,500 of running costs, you keep about £65,682, roughly £270 a month more.
| Employer NI above £5,000 | 15% |
| Apprenticeship levy (passed on by most umbrellas) | 0.5% |
| Income tax: basic, higher, additional | 20%, 40%, 45% |
| Employee NI, £12,570 to £50,270 | 8%, then 2% |
| Dividend tax: basic, higher, additional | 10.75%, 35.75%, 39.35% |
| Corporation tax | 19% to 25% |
For the full picture, read our guide to limited company or umbrella for IT contractors.
No. Outside IR35, a limited company usually leaves you better off, especially at higher day rates or if you leave profit in the company. Inside IR35, or on short contracts, an umbrella is often simpler and costs less to run.
The umbrella is your employer, so it has to pay employer National Insurance and usually the apprenticeship levy. Both come out of the contract rate before your gross pay is worked out, which is why umbrella take-home can look lower than you expect.
It depends on what you need, but accountancy, insurance, software and bank charges are the main costs. The calculator starts at £2,500 a year, and you can change it to match your own quotes.
If your contract is inside IR35, the fee-payer deducts tax and National Insurance as if you were an employee. A limited company then gives you little or no tax advantage, so most contractors use an umbrella for those contracts.
Usually yes, if the agency or client agrees and the contract is outside IR35. We can set up the company, register it for tax and have everything ready before your first invoice.
The most tax-efficient way to pay yourself from your limited company.
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