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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:

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Take-home pay examples: umbrella vs limited

Steve and Julie have both been offered similar contracts at a well-known bank. The contract is deemed as outside 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

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 limited company

Contract value invoiced




Umbrella fee


Income tax and Employers/Employee NI


Total Deductions


Take home pay


Limited company

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 Caroola.

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. For more information on expenses, read 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 broadly the same as Steve’s.

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, a lot of contractors find the administrative side is outweighed by the tax efficiencies, and once you get into the swing of things it does become easier.

Speak to an expert

Flexibility is key in the contracting world, and so is having the ability to easily switch between limited and umbrella so you can continue to work on various assignments, regardless of their IR35 status. That’s why, as part of the majority of our packages, we have margin free umbrella employment, allowing you to seamlessly transition between business structures, without having to change your accountant.

To find out more about our offering, get in touch.

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How can Caroola help?

Appointing an accountant can save you time and stress when starting up on your own. If you would like to speak to someone about any of the above information or any other queries you may have, arrange a callback and a member of the team will be in touch.

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