How Much Can I Earn as a Contractor?

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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.

Umbrella or limited company: what could I take home?

Depending on whether you decide to work under an umbrella company or establish your own limited company, your take home pay will alter.

How much could I take home working through a limited company?

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.

Calculating your take home pay

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.

How much could I take home working under an umbrella company?

As an umbrella employee, your take home pay will be lower compared to the take home pay you could expect when operating through a limited company. This amount will be paid to you after tax and National Insurance contributions have been deducted. You can see more details about the difference between limited and umbrella, including the pros and cons of each, in our guide.

Get in touch

If you have any questions about how much you could expect to take home as a contractor or how to maximise your tax efficiencies, we’re here to help.

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Looking to pay less tax?

Find out how to maximise your take-home pay and become a successful contractor in our free guide. Also covered in our guide is:

  • Getting started – discover whether limited or umbrella is best for you and learn how to get started.
  • Your tax and financial obligations – all you need to know about your paying tax, filing accounts and what costs you offset.
  • Making your business a success – learn how to grow your business, how to market yourself and to forecast for the future.

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