Take Home Pay Examples

When you decide to become a contractor, there are two key ways to operate; as the employee of an umbrella company or by forming your own limited company and working as a limited company director. There are a number of reasons why each option could be the right route for you, however it is likely that the amount of money you could take home will be an aspect of your decision making process. Below we’ve given a couple of real life examples so you can get an idea of what to expect from your take home pay. For a personalised calculation of how much you could take home as a limited company director please visit our take home pay calculator:

Umbrella vs Limited Take Home Pay Examples

Steve and Julie have both been offered similar contracts at a well-known bank. The contract is deemed as outside of IR35 and has been offered to both on a twelve month term with a day rate of £200. Both have decided to structure themselves differently, with Steve opting to work as an umbrella employee and Julie deciding to incorporate her own limited company.

Umbrella Company Take Home Pay Example

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

Contract value invoiced




Umbrella fee


Income tax and Employers/Employee NI


Total Deductions


Take home pay


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 £120 plus VAT.

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

Contract Value Invoiced




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 on the following link to view our guide to contractor expenses.

Accountants fee


Income tax, Employers/Employee NI and corporation tax


Professional Liability Insurance


Total deductions


VAT Flat rate scheme savings


Interest from bank account


Take home pay


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.

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