Contractor Salary Calculator UK

A contractor salary calculator estimates your take-home pay as a UK contractor, comparing how much you'd keep operating through a limited company versus an umbrella company versus standard PAYE employment, after tax, National Insurance and relevant deductions.

It depends on your day rate, contract length and IR35 status. Limited companies can be more tax-efficient for contractors outside IR35 due to dividend tax treatment, while umbrella companies are simpler and required for contracts deemed inside IR35. Higher day rates generally favour limited company structures when outside IR35.

IR35 is UK tax legislation determining whether a contractor is genuinely self-employed or should be taxed like an employee ("inside IR35"). If inside IR35, you're taxed similarly to a PAYE employee regardless of using a limited company, significantly reducing the tax efficiency of contracting.

If operating through a limited company outside IR35, a common approach is setting aside roughly 25-30% of company revenue for Corporation Tax, VAT (if applicable) and your personal tax on salary and dividends drawn. Umbrella company contractors have tax deducted automatically via PAYE.

Not necessarily. Contractors inside IR35 or using umbrella companies pay broadly similar tax and NI to employees. Contractors outside IR35 using a limited company can be more tax-efficient due to dividend tax treatment, but take on additional business costs and administrative responsibility.

Limited company contractors outside IR35 can typically claim legitimate business expenses (equipment, training, travel to temporary workplaces) before calculating profit and tax. Umbrella company contractors have more limited expense claims, usually restricted to specific allowable categories.