Contractor Take-Home Pay Calculator
Compare your take-home pay as a Ltd company, umbrella contractor, or sole trader. Enter your day rate and working pattern — the calculator shows all three structures side by side so you can see which puts the most money in your pocket.
Frequently asked questions
Which contractor structure gives the best take-home pay?
For most contractors earning above £30,000 per year, operating through a limited company typically gives the highest take-home pay. This is because you can draw a small salary (below the income tax threshold) and take the remainder as dividends, which are taxed at a lower rate than income. The advantage narrows at higher income levels due to corporation tax and dividend tax.
What is the difference between umbrella and Ltd for contractors?
An umbrella company employs you directly — you are on their payroll and they deduct PAYE tax and NI before paying you. It is simpler with less admin but typically results in a lower take-home. A limited company is your own business entity. You are both director and shareholder, giving you more tax efficiency but also more responsibilities: annual accounts, corporation tax returns, and director duties.
Is IR35 relevant to my choice of structure?
Yes, significantly. If your engagement is deemed inside IR35, operating through a limited company loses most of its tax advantage — you will be taxed as if you were employed regardless. In that case, umbrella employment is often simpler and more compliant. If you are outside IR35, a limited company is usually the most tax-efficient option. Use our IR35 Checker to assess your status.
What are the risks of using a sole trader structure as a contractor?
As a sole trader you have unlimited personal liability — your personal assets are at risk if something goes wrong. You also cannot split income with a spouse or partner. Tax efficiency is lower than a limited company at most income levels. However, sole trader status is simpler to manage and has no company filing obligations, making it suitable for lower-income contractors or those just starting out.
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