How much can I earn as a contractor?

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.

Umbrella or limited company 

Depending on whether you decide to work under an umbrella company or establish your own limited company, your take home pay will alter. If you decide to go limited, you can expect to take home around 75-80% of your contract value. This is because working through a limited company is often the most tax efficient way of working, meaning you can take home more of your hard-earned money. 

On the other hand, as an umbrella employee, your take home pay will be approximately 40-50%. This amount will be paid to you after tax, National Insurance contributions and a fee from your umbrella company. You can see more details about the difference between limited and umbrella, including the pros and cons of each, in our guide

Free Contractor Guides

Calculating your take home pay

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.

Support from SJD

Calculating your finances and weighing up your options when it comes to contracting is not always easy, but SJD Accountancy is here to help. Our team have a wealth of experience and can provide the best advice depending on your situation. To speak to one of our new business team, just call 01442 330165 or email

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