If you're a contractor or freelancer in the UK, you might be weighing up your options between working through an umbrella company or as a PAYE employee. This calculator helps you understand the financial implications of both choices based on your specific situation.
Our calculator takes into account factors like your daily rate, expenses, umbrella company fees, and pension contributions to provide a realistic comparison of your potential take-home pay under each arrangement.
Simply adjust the values below to see which option could be more financially beneficial for your circumstances.
Annual Take-Home:
£0.00
Monthly Take-Home:
£0.00
Annual Take-Home:
£0.00
Monthly Take-Home:
£0.00
Based on your inputs, Umbrella gives you a better take-home pay by £0.00 per year.
With PAYE, you're employed directly by your client or an agency. Your employer handles all tax and National Insurance contributions before paying your salary.
PAYE is generally simpler from an administrative perspective, as all your tax affairs are handled automatically. However, you won't be able to claim certain business expenses, and you may have less flexibility.
With an umbrella company, you become their employee while working on different contracts. The umbrella company handles your payroll, tax, and National Insurance contributions.
One advantage is that you can claim certain business expenses, potentially reducing your tax burden. However, umbrella companies charge fees for their services, which cuts into your earnings.
Remember that while this calculator gives you a financial comparison, your decision might also depend on other factors like administrative convenience, IR35 status, and long-term career goals.
Always consult with a qualified financial advisor or accountant before making decisions about your employment structure, as individual circumstances can vary significantly.
Choosing between an umbrella company and PAYE employment is a significant decision that affects your take-home pay, tax obligations, and administrative responsibilities.
Our calculator provides a personalised financial comparison, but remember to consider other factors beyond just the numbers. These might include your contract length, IR35 status, desire for employee benefits, pension arrangements, and whether you plan to move to a limited company structure in the future.
The right choice depends on your individual circumstances, career goals, and financial priorities. We recommend using this calculator as a starting point and seeking personalised advice from a qualified contractor accountant.