£900/day — Umbrella vs Limited Company
£198,000/year · 220 days · Full take-home comparison · 2025-26
Umbrella Company
| Revenue (900 × 220) | £198,000 |
| Employer NI (15%) | −£28,950 |
| Umbrella fee | −£1,300 |
| Employee gross | £167,750 |
| Income tax | −£62,319 |
| Employee NI | −£5,366 |
| Net take-home | £100,065 |
Ltd Company (outside IR35)
| Revenue | £198,000 |
| Salary drawn | −£12,570 |
| Employer NI (15%) | −£1,136 |
| Corporation tax (19–25% (marginal relief)) | −£45,088 |
| Dividends paid | £139,206 |
| Dividend tax | −£37,388 |
| Net take-home | £114,388 |
Which is better on £900/day?
Limited company wins by £14,323/year (£1,194/month, 14.3% more). At £900/day, the dividend tax savings comfortably outweigh typical Ltd Company running costs (accountant: ~£1,500-2,500/year). The break-even on Ltd Company admin costs vs umbrella is typically below £200/day — so £900/day strongly favours a Ltd Company structure, provided your engagement is outside IR35.
Note: Umbrella figures assume employer NI at 15% (from April 2025) and umbrella fee of £1,300/year (£25/week). Ltd Company figures assume £12,570 salary, no allowable expenses, 19–25% (marginal relief) corporation tax, 8.75%/33.75% dividend tax. Both based on 220 days. Ltd Company only applies outside IR35. Consult a qualified accountant for your specific situation.
Umbrella vs limited company on £900/day in 2025-26
At £900/day for 220 days, annual revenue is £198,000. Via an umbrella company, employer NI of £28,950 (15% on earnings above £5,000 from April 2025) and an umbrella fee of £1,300 reduce your employment salary to £167,750. After income tax (£62,319) and employee NI (£5,366), take-home is £100,065 (£8,339/month).
A limited company outside IR35 extracts the same revenue more efficiently. A salary of £12,570 falls exactly within the personal allowance and NI primary threshold — zero income tax, zero employee NI. Employer NI of only £1,136 is due on the salary above £5,000 (at April 2025's 15% rate). Company profit after salary and employer NI is subject to corporation tax of £45,088 (19–25% (marginal relief)). The remaining £139,206 in dividends incurs dividend tax of £37,388 (8.75% basic / 33.75% higher). Net take-home: £114,388 (£9,532/month).
The Ltd Company advantage of £14,323/year reflects the structural difference: umbrella funnels everything through PAYE (income tax at 20%/40%, NI at 8%), while a Ltd Company routes most income through dividends (taxed at 8.75%/33.75%) after a lower corporation tax charge.
Frequently asked questions
Should I use umbrella or Ltd Company on £900/day?
On £900/day (£198,000/year), a limited company outside IR35 takes home £114,388 vs £100,065 via umbrella — a difference of £14,323/year (£1,194/month, 14.3% more). Unless your engagement is inside IR35 or you prefer the simplicity of umbrella, a Ltd Company is significantly more tax efficient at this rate. You need to weigh the Ltd Company savings against accountancy fees (typically £1,000-£2,500/year) and the time/admin involved.
How much does an umbrella company cost in tax?
On £900/day (£198,000/year revenue), the umbrella company deducts employer NI of £28,950 (15% on earnings above £5,000) and an umbrella fee of £1,300 (£25/week). Your employment salary of £167,750 is then subject to income tax (£62,319) and employee NI (£5,366). Total take-home: £100,065. Compared to your gross revenue of £198,000, umbrella taxation takes £97,935.
What is the Ltd Company breakdown on £900/day?
Revenue: £198,000. Salary: £12,570 (at personal allowance — no income tax, no employee NI). Employer NI: £1,136. Corporation tax: £45,088 (19–25% (marginal relief)). Dividends distributed: £139,206. Dividend tax: £37,388. Net take-home: £114,388.
Can I switch from umbrella to limited company?
Yes — you can set up a limited company at any time via Companies House (cost: £12-50). You will need a contractor-specialist accountant to manage your accounts, payroll, VAT (if applicable) and annual returns. Most accountants charge £1,000-£2,500/year for a standard contractor Ltd Company. The switch typically makes financial sense if you are on a day rate above £200-250/day and your engagement is outside IR35.
What if my engagement is inside IR35?
If your engagement is inside IR35, a Ltd Company provides no take-home advantage — you still pay full PAYE on the income your company receives. In that case, umbrella is typically simpler: no Companies House filings, no year-end accounts, no personal self-assessment liability from dividends. Use our IR35 calculator to see the full inside vs outside comparison.
Are these figures accurate for my situation?
These are estimates based on standard assumptions: umbrella fee £1,300/year, no pension contributions, England tax rates, standard personal allowance. Your actual figures will depend on: your umbrella company's specific fee, any pension contributions, expenses claims, your IR35 status, and your accountant's strategy for the Ltd Company. Always verify with your accountant or umbrella provider before making financial decisions.