Getting paid through Umbrella or Limited Company? What is best?
Let us assume that you work as a contractor through an agency and you get paid £30,000 per year. How much tax will I have to pay as an employee through the Umbrella, and what tax will I have to pay if I setup my own Limited company.
Working as employee under Umbrella:
Salary £30,000
Less Personal allowance £11,000
Taxable income £19,000
Income Tax 19,000*20% = £3,800
Ni tax 21,940*12%= £2,632
Total Tax paid £6,432
Taken home after tax £23,568
Working as Limited Company:
Income £30,000
Less Salary £8,060
Net Profit £21,940
Assume no expenses to charge
Corporation tax 21,940*20%= £4,388
Retained profit £17,552
Take all as Dividend
Tax payable 17,552 less (5000+2,940) £9,607
Tax payable on Dividend £9,607 * 7.5%= £720
Total Tax paid £4388+720 = £5,108
Taken home £24,892
Total tax saving as Limited Company £6,432 – £ 5,108 = £1,324
Don’t forget under the company there will be some expenses which this will reduce corporation tax even further.
To discuss how Accountants in Slough can assist you with your Accounts Preparation, please contact us for a free, no obligation consultation on: 01753 373 505 or complete our Contact form and we will get back to you.
To discuss how Accountants in Slough can assist you with your Accounts Preparation, please contact us for a free, no obligation consultation on: 0333 772 1616 or complete our Contact form and we will get back to you.
