£550 a day after tax
At £550 a day for 220 days a year, a UK contractor takes home about £5,751 a month through an umbrella company or £6,261 a month through a limited company in 2026/27; a limited company leaves more.
Umbrella company
For work inside IR35, paid through PAYE
£69,009 a year
£5,751 a month, plus £3,522 into your pension
Like a permanent salary of £101,188
Your own limited company More take-home
For work outside IR35, salary plus dividends
£75,127 a year
£6,261 a month
Like a permanent salary of £117,287
On £121,000 of fees (£550 a day for 220 days), a limited company leaves £6,118 a year more. "Like a permanent salary" is the employee salary with the same take-home pay.
Umbrella company, step by step
| Fees from the agency | £121,000 |
|---|---|
| Umbrella margin (£20 a week × 44 weeks) | −£880 |
| Employer National Insurance (15% above £5,000) | −£14,776 |
| Apprenticeship Levy (0.5%) | −£518 |
| Employer pension (3% of qualifying earnings) | −£1,321 |
| Your gross pay, including holiday pay | £103,506 |
| Income tax | −£28,214 |
| National Insurance | −£4,081 |
| Your pension contribution (5%, before tax) | −£2,202 |
| Take-home pay | £69,009 |
Limited company, step by step
| Fees invoiced (excluding VAT) | £121,000 |
|---|---|
| Director salary | −£12,570 |
| Employer National Insurance on the salary | −£1,136 |
| Company profit | £107,295 |
| Corporation Tax (23.0% effective) | −£24,683 |
| Paid out as dividends | £82,611 |
| Your salary | £12,570 |
| Your dividends | £82,611 |
| Dividend allowance on £500 | £0 |
| Ordinary rate (10.75%) on £37,200 | −£3,999 |
| Upper rate (35.75%) on £44,911 | −£16,056 |
| Take-home pay | £75,127 |
Inside IR35 through your own company, the agency or client deducts income tax and National Insurance as if you were an employee and pays employer National Insurance (£17,400) itself. On the full £121,000 you would keep £76,537, but inside-IR35 rates are usually lower than outside-IR35 rates, so compare the rate you are actually offered.
Fees exclude VAT. See the assumptions behind both routes.
By days worked
| Days a year | Fees | Umbrella, a year | Limited company, a year |
|---|---|---|---|
| 200 | £110,000 | £63,786 | £69,932 |
| 220 | £121,000 | £69,009 | £75,127 |
| 230 | £126,500 | £70,806 | £77,724 |
| 240 | £132,000 | £72,602 | £79,586 |
England, Wales or Northern Ireland, 2026/27, £12,570 director salary, no business costs, umbrella margin £20 a week with the minimum workplace pension.
Frequently asked questions
How much is £550 a day after tax?
Working 220 days a year (£121,000 of fees) in 2026/27, you take home about £69,009 a year (£5,751 a month) through an umbrella company, plus £3,522 into your pension, or £75,127 (£6,261 a month) through your own limited company outside IR35.
What permanent salary is £550 a day worth?
For the same take-home pay as a permanent employee you would need about £101,188 a year compared with the umbrella route, or £117,287 compared with a limited company, before pension and benefits such as paid holiday and sick pay.
Is it different in Scotland?
Salary is taxed at Scottish rates, dividends at UK rates. At £550 a day for 220 days, the umbrella route leaves £65,611 and a limited company £75,127 in Scotland.
Other day rates
How the calculation works and every assumption: UK contractor calculator.