Umbrella vs Limited Company Calculator
Compare take-home pay for umbrella (PAYE) vs limited company (outside IR35) for every contractor day rate. Based on 220 working days per year. 2025-26 tax year.
Umbrella vs limited company — how they work
You become an employee of the umbrella company. Employer NI (15% from April 2025) and an umbrella fee (typically £25/week) are deducted from your revenue before you receive a PAYE salary. Simple but costly.
You own your own company. Draw a salary at the personal allowance (no income tax) and take remaining profit as dividends — taxed at lower rates than PAYE. Requires an accountant but typically far more tax efficient.
Umbrella is often required for inside-IR35 engagements, or when contracts are short-term and the admin of a Ltd Company is not worth it. Some clients and agencies only work with umbrella for certain roles.
On higher day rates outside IR35, a Ltd Company typically adds £5,000–£25,000+ per year vs umbrella. The advantage grows with earnings due to higher dividend rates still being lower than income tax rates.
Umbrella vs limited company — all day rates 2025-26
| Day rate | Annual revenue | Umbrella net | Ltd Co net | Ltd advantage | |
|---|---|---|---|---|---|
| £200/day | £44,000 | £30,052 | £35,005 | £4,953 | View → |
| £250/day | £55,000 | £36,784 | £43,135 | £6,351 | View → |
| £300/day | £66,000 | £42,776 | £50,112 | £7,336 | View → |
| £350/day | £77,000 | £48,199 | £55,468 | £7,269 | View → |
| £400/day | £88,000 | £53,622 | £60,825 | £7,203 | View → |
| £450/day | £99,000 | £59,045 | £66,181 | £7,136 | View → |
| £500/day | £110,000 | £64,468 | £71,537 | £7,069 | View → |
| £550/day | £121,000 | £69,431 | £76,894 | £7,463 | View → |
| £600/day | £132,000 | £72,984 | £82,250 | £9,266 | View → |
| £650/day | £143,000 | £76,219 | £87,606 | £11,387 | View → |
| £700/day | £154,000 | £80,243 | £92,962 | £12,719 | View → |
| £750/day | £165,000 | £85,198 | £98,319 | £13,121 | View → |
| £800/day | £176,000 | £90,154 | £103,675 | £13,521 | View → |
| £900/day | £198,000 | £100,065 | £114,388 | £14,323 | View → |
| £1,000/day | £220,000 | £109,976 | £125,100 | £15,124 | View → |
| £1,200/day | £264,000 | £129,798 | £146,528 | £16,730 | View → |
Umbrella: employer NI 15% (from April 2025), umbrella fee £1,300/year, PAYE on remainder. Ltd Co: £12,570 salary, 19%/25% corp tax, 8.75%/33.75% dividend tax. Both based on 220 days/year. Estimates only.
Up to £550/day
£600/day and above
Umbrella vs limited company in 2025-26
On £500/day (£110,000/year), an umbrella contractor takes home £64,468 after employer NI, umbrella fees, income tax and employee NI. A Ltd Company contractor outside IR35 takes home £71,537 — an advantage of £7,069.
The umbrella company acts as your employer. It collects the invoice payment from your client, deducts employer NI (15% on earnings above £5,000 from April 2025), deducts its margin/fee, then pays you a PAYE salary subject to income tax and employee NI. You receive full employment rights (holiday pay, sick pay rights) but pay heavily for the privilege.
A limited company keeps more of the revenue in the company first. After a small salary and employer NI on that salary, remaining profit is taxed at 19–25% corporation tax. Profits are then distributed as dividends taxed at 8.75% or 33.75% — substantially below income tax rates.
Key consideration: IR35 status. If your engagement is inside IR35, a Ltd Company provides no benefit — you still pay full PAYE. In that case, umbrella is simpler. Only use a Ltd Company outside IR35 where your status is clearly determined. See our IR35 calculator.