This calculator works out your tax liability according to the business structure you choose to trade under (limited or umbrella company).
How to use the calculator
Simply enter your details into the yellow boxes, and the app will calculate how much tax you will pay, and your percentage tax home pay.
For the sake of simplicity, the calculator assumes you work a 5-day week, for 44 weeks per year.
Scroll down to read our notes and further assumptions.
|2016-17 Tax Year|
Assumptions used in the calculator
- Assumes that your contract work is not caught by the IR35 legislation.
- ‘Annual Travel Expenses’ cover any travel, subsistence and accommodation costs incurred for your contract, falling within the HMRC Travel Rules for site-based employees. You can claim further expenses if you work via a limited company, which will lower your Corporation Tax bill further.
- Pension contributions must be to Approved Schemes paid via your limited company/umbrella company.
- Does not take National Minimum Wage and Holiday pay entitlement into account if expenses exceed those allowable for the stated income level.
- Ignores Pay Between Assignment and Agency Workers Regulation (AWR) implications/obligations.
- Ignores VAT.
- Ignores the effect of the Annual Employment Allowance (£3,000) on the limited company column (impact is minimal for most contractors).
- Uses the Corporation Tax Small Profits Rate (£300,000) applies at 20%.
Aside from the total tax liability, there are a number of other differences between the two trading structures. Read or Limited / Umbrella comparison tables for the pros and cons of each.
All calculations have been verified by our ACA qualified accountant.