Use this when a contract, role or recruiter conversation leaves you comparing three very different wrappers. It gives a first-pass take-home estimate for PAYE, an umbrella route and a simple one-person limited company, then flags the admin and IR35 risk that the cash number alone does not capture.
Important: this is a planning checker, not an IR35 determination tool. If the working practices point to inside IR35, the limited-company route can be misleading even if the first-pass take-home looks higher.
This model keeps the tax side intentionally simple. It ignores VAT, pension design, travel relief edge cases and complex share structures.
Highest first-pass annual take-home
PAYEDifference between top and bottom route: £0
PAYE estimated take-home£0Umbrella estimated take-home£0Limited company estimated cash out£0Limited company post-tax profit available as dividends£0
Lowest admin routePAYEMain risk flagCheck IR35 and contract wordingBest first next stepCheck the tax and working-practices detail
What this means
The route with the highest first-pass cash outcome is not automatically the best route. IR35, admin effort, accounting cost and employer pension design can all matter more than a small difference in take-home.
Result: On a £450/day inside-IR35 contract James keeps about £62,500/year through an umbrella — equivalent to a £75-80k permanent salary. Inside-IR35 PAYE through agency direct is mathematically similar; umbrella adds the margin fee but offers some expense flexibility.
Same £450/day, but contract is OUTSIDE IR35
Gross contract value
£99,000
Structure
Personal Service Company (Ltd)
Salary taken (NI threshold)
£12,570
Dividends
rest after Corp Tax
The math:
Corporation Tax at 25% on profits ~£82,000: ~£20,500
Available for dividends after CT: ~£61,500
Dividend tax: £500 allowance free, ~£37,200 at 10.75% basic, ~£23,800 at 35.75% higher
Dividend tax total: ~£12,510
Salary income tax + NI: ~£0 (under PA + above primary threshold)
Total tax + CT: ~£33,010
Take-home: ~£65,990
Result: Outside-IR35 take-home of ~£66,000 vs inside-IR35 ~£62,500 — only about £3,500/year benefit (versus ~£20-25k difference under old rules pre-2017). The gap has narrowed dramatically as dividend taxes have risen and Corporation Tax went to 25%. Outside IR35 still wins, but the margin is no longer life-changing.
Figures use 2026/27 UK tax-year rates and thresholds. Always verify against your specific payslip or tax statement before acting.
Every page is reviewed against the editorial standards, written from primary sources, sourced openly, and corrected publicly. No affiliate revenue. No sponsored content. No paid placements.
PAYE is treated as the clean employment baseline. The umbrella route starts from the contract value and deducts umbrella margin plus employer-side payroll costs before estimating employee tax. The limited-company route pays a salary first, then applies corporation tax and dividend tax to the remaining profit.
Umbrella and limited-company routes can carry extra accounting, admin and compliance load.
Inside-IR35 working practices can wipe out the apparent benefit of a limited company.
This is best used as a shortlist tool before checking the real contract and payroll wording.
This page assumes a simple one-person company with no associated companies and no complex benefit or pension structure. The corporation-tax marginal-relief estimate is a first-pass simplification for one-person planning.