There are many reasons as to why people choose to join the world of contracting…  You’re your own boss, have more control, have the opportunity to learn new skills, and can potentially earn more money than a permanent employee.

SJD Accountancy - contractor take home pay

Limited vs Umbrella

How much you could earn as a contractor will firstly depend on how you decide to trade.  There are two options recommended: working through an umbrella company or as your own Limited company.

There is usually one in particular that will suit you and your needs best, for example, umbrella companies are generally best for shorter term or lower value contracts.

By working through an umbrella company you could be entitled to around 60%- 65% of your contractor take home pay.

However, by contracting through your own Limited company you could take home between 75%-80%.  Your take home pay will generally be higher through a Limited company because contractors working through an umbrella company are seen more as an employee of the umbrella.  This means that they would therefore pay the same contributions as a permanent employee – both employees and employers National Insurance.

Your expertise 

Your take home pay will vary depending on which industry you are working in, your skill set and the company that you are working for.  By using your skills and simply just doing what you’re good at, you could very easily demand higher hourly rates.

How a take home pay calculator can help you…

SJD Accountancy have a useful selection of contractor calculators on their website allowing you access to a contractor calculator for almost any situation including: VAT calculators, Fuel costs, Corporation tax and many more. Some of these can be found here: SJD Accountancy’s calculators.

By using a contractor take home pay calculator you could work out an approximate figure of your take home pay.   This can be very useful when trying to decide whether to go Limited or to trade through an umbrella company.  After putting in an hourly or daily rate, the rest will all be worked out for you; the take home amount will assume full tax planning, as well as other aspects that will be more easily explained by your contractor accountant.