Limited or Permanent Employee?
Firstly, let us say this is not SJD promoting or recommending that any contractor works through their own limited company. You and only you can make this decision. There are pros and cons for each method of working and all personal situations are different, a useful page that may help make your decision is our Take home pay Limited company or Umbrella company - The Real Story. Take home pay Limited company or Umbrella company - The Real Story. SJD offer both Limited Company and umbrella services, and therefore are one of the very few firms that can offer impartial advice.
Back to the question,"so how much will I take home as a contractor?" This is without a doubt one of the most common questions we get asked - not really surprising when you consider it’s one of the major reasons people decide to move from the world of the employed to contracting.
Basically, if you are a contractor working through your own limited company your take home pay will be anywhere between 75% - 80% of your contract value, for example:
- Daily rate £200 take home between £150 - £160
- Daily rate £300 take home between £225 - £240
- Daily rate £400 take home between £300 - £320
- Daily rate £600 take home between £450 - £480
Any accountant or tax adviser will tell you that working through your own limited company is the most tax efficient way of working, meaning you keep more of your hard earned money.
Our free online contractor calculator provides an illustration of the maximum amount a contractor could take from their contract when working through their own limited company. It assumes full tax planning and a number of other procedures are in place, some of which are quite complex and are best discussed directly with your accountant.
As mentioned, most clients and contractors working through their own limited company take home between 75% and 80% of their contract value.
If you would like to know more about working through your own limited company please read one of our many FREE to download guides, speak to one of SJD's Client Liaison Managers on 0500 152500 /01442 275789 or read our two minute guide to contracting through your own limited company.
You may also find our guide - 'How expenses work as a contractor working through your own limited company', helpful, especially if you are new to contracting or are still in the world of the permanent employee.
Other useful pages, guides and case studies include:
Take home pay calculator - How much could you be taking home
First time Contracting or Freelancing? - A summary of the alternatives along with pros and cons
Guide to Contracting - All the best guides to contracting in one place
Limited or Umbrella? Can't decide? - We help you decide which is best
Take home pay case studies - Examples of contractors using a ltd co. & umbrella co.
If you have any question about contracting or would like any further advice please contact your SJD Accountant or call our Client Services helpdesk on 0500 152500 / 01442 275789 or alternatively e-mail jaime.thorpe@sjdaccountancy.com
SJD Accountancy is the UK's largest specialist provider of fixed fee, limited company accountancy services to contractors and freelancers.
Article from SJD Accountancy
For more information about SJD Accountancy please visit SJD Accountancy Group. Why not also visit SJD Accountancy.
