Take Home Pay Examples

Other Contractor case studies include:

For more details about 'How much can you earn as a contractor' visit our NEW page.

Case study - Take home pay Umbrella and Limited Company

Umbrella option 

Steve - opted for using an umbrella company that charged him a monthly fee of 5% of his earnings (fee's can be as high as 10% of the invoiced contract amount).

Steve's decision to use an umbrella company was based on:
1. it was his first contract;
2. he wasn't sure if he'd be contracting for long;
3. he was a little worried about the paperwork involved in running his own ltd company.

After his first year of contracting Steve reviewed his finances:

Contract Value Invoiced £65,000
Expenses £6,000
Umbrella Fee -£3,250
Income tax and Employers/Employee NI: -£20,492
Total Deductions: -£23,742

 
Take home pay: £41,258

Limited Company Option 

Julie - had previously worked through an umbrella company and decided that it was time to go limited, a number of her friends had already made the move; Julie used SJD Accountancy whose fees are £110 per month plus VAT.

After one year of working through her limited company, Julie reviewed her finances:

Contract Value Invoiced £65,000
Expenses £8,000


Julie's claimable expenses are a little higher than Steve's as they include her accountancy fees along with other expenses she can now claim as she's working through her own limited company. Click the link to read the SJD Accountancy Contractor Guide to Expenses.
 

Accountants fee: -£1,340
Income tax, Employers/Employee NI and corporation tax: -£15,094
Professional Liability Insurance -£350
Total Deductions: -£16,784
VAT Flat rate scheme savings £1,446
Interest from bank account £360
Take home pay: £50,022

Both Steve and Julie are outside IR35, if Julie had been inside IR35 her take home pay would have been £46,076

Obviously, Julie had more paperwork to administer, however she feels the extra effort was worth the increase in her take home pay and control over her finances.

Working through your own limited company isn't right for everybody, especially those who are only planning to contract for a short period or those with low contract values. Also, as mentioned, there is some administration that you must personally take care of.

However, the administrative side doesn't take that long, and once you get into the swing of things it does become easier. Many people find working through their own limited company is extremely rewarding and would never go back. A testament to this is we very rarely hear of clients throwing the towel in and going back to using an umbrella company.

To see what's involved in working through a limited company verses an umbrella company visit our limited vs Umbrella page.

For an illustration of what you could be taking home visit our Limited company business calculator which includes full tax planning provisions.

For details of SJD's award winning umbrella company visit ContractorUmbrella.

If you have any question about contracting or would like further advice please either contact your SJD Accountant or call our new client services helpdesk on 0500 152500 / 01442 275789 or email michelle.turbutt@sjdaccountancy.com. 

Appoint SJD Accountancy and never worry about your tax or accountancy affairs again!

SJD Accountancy

SJD Accountancy are the UK's largest specialist provider of fixed fee, limited company accountancy services to contractors; we've been acting for contractors across the UK since 1992 and have more than 11,000 clients.

We are the only National specialist firm of accountants with offices in all major UK cities so you’ll never be far from your accountant. SJD also have more qualified staff than any other firm in our market with qualifications from the following major tax and accountancy bodies - ATII, ATT, ACCA, CA, ACA, FCCA, ACMA. You’ll also be pleased to know that we are one of the lowest priced as well.

SJD have also won every relevant industry award possible, including:

  • The British Accountancy Award Winners 2011 for ‘Accountant of the Year’.
  • Winners of the Accountancy Age Awards for Excellence in 2007 and 2004, finalists in 2010 and all years since 2003.
  • Four time winners of the 'Best Contractor Accountant' award voted for by visitors to Contractor UK 2010 to 2007.
  • Winners of the "Sunday Times Best Small Companies to Work For in the UK" Award, achieving the highest position ever for a firm of accountants.
  • 'Excellence in Customer Service' - Finalists National Chamber of Commerce Awards 2008.
  • 'Business of the Year' - Finalists National Chamber of Commerce Awards 2008.
  • 'Outstanding Three Star Status' - Best Companies Accreditation 2009.
  • Award for 'Customer Commitment' at the Institute of Customer Service UK Customer Satisfaction Awards 2011.
  • Deemed PCG Accredited Accountants and fully MSC compliant.
  • UK Customer Experience Award for 'Best Professional Team of the Year' 2011.

We offer all clients:

Free face-to-face meetings. This is another unique service, only SJD offers free face to face meetings - tax is complicated and sometimes only a meeting will do.
Unlimited access to your own dedicated accountant. No call centres, no outsourcing, no automated call handling. Simply telephone, email or meet your own dedicated accountant face to face.
Money back service guarantee. All your telephone calls and emails will be answered the same day or we will refund your monthly fee's.
Outstanding reputation. We have won more awards for customer service and accountancy excellence than any other firm in our market.
All inclusive low cost monthly package which includes completion of accounts, payroll bureau, dividends and corporation tax computations, personal taxation, free bookkeeping software, unlimited access to your accountant and all company returns.

All this for a fixed monthly fee of £110 plus VAT, which is one of the lowest prices in the market. And most importantly, in a recent survey 98% of our clients rated SJD as 'better than other accountants' - we are working hard to convince the other 2%!

If you have any question about contracting or would like any further advice please either contact your SJD Accountant or call our new client services helpdesk on 0500 152500 / 01442 275789 or e-mail michelle.turbutt@sjdaccountancy.com. 

Appoint SJD Accountancy and never worry about your tax or accountancy affairs again!

You may also find the following pages, guides and case studies useful:

Take home pay calculator - How much could you be taking home
Contractor FAQ - All your frequently asked questions and their answers
First time Contracting or Freelancing? - A summary of the alternatives along with pros and cons
Choosing an accountant - For a full review
Step-by-step Guide to Contracting - Download a FREE copy of our guide
Limited or Umbrella? Can't decide? - We help you decide which is best for you
Guide to Contracting - All the best guides to contracting in one place
Expenses Guide - Know exactly what you can claim
Umbrella company guide - Everything you ever wanted to know about umbrella company services
IR35 Guide - A great plain English guide to IR35.

*The above calculations are based on 2010 tax rates.

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