One of the most important questions for contractors, when they move from permanent employment, is how much they can expect to take home. Typically, contractors are better paid than permanent employees, which can be a deciding factor in making the decision to contract. However, this figure can differ depending on whether you decide to form a limited company or become an umbrella employee.
If you're looking for information about how much you could expect to earn and whether you should contract through your own limited company or under an umbrella, our guide is here to help.
Depending on whether you decide to work under an umbrella company or establish your own limited company, your take home pay will alter.
Working through your own limited company means that you are able to maximise your tax efficiencies by setting your salary and paying yourself a combination of salary and dividends. In addition, you can also claim tax relief on a number of business expenses.
As an umbrella employee, your take-home pay will be less than the amount you could expect to earn when operating through a limited company. This amount will be paid to you after tax and National Insurance contributions have been deducted. To see more details, read our guide on the difference between limited and umbrella.
| Day rate | Umbrella weekly take home | Limited weekly take home |
| £150 | £599 | £634 |
| £200 | £707 | £828 |
| £250 | £856 | £1025 |
| £500 | £1491 | £1973 |
This table is based on a series of assumptions, including 37.5 hours a week, outside IR35 on our SJD Premium package with a flat rate VAT of 15.5% and claimable expenses of £100 a week. For a more accurate and tailored quote please get in touch with the team.
Since there are a lot of factors impacting how much you could earn, it can be hard to predict exactly how much you can expect to take home.
Our free online contractor calculator provides an illustration of the maximum amount a contractor could take from their contract when working through their own limited company.
It assumes full tax planning and a number of other procedures are in place, some of which are quite complex and are best discussed directly with your accountant.
Get in touch with our team to discuss how much you could expect to take home as a contractor, or how to maximise your tax efficiencies.
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