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Umbrella or limited company in 2026/27?

How take-home compares between an umbrella company and a limited company at three day rates, inside and outside IR35, using 2026/27 UK rates.

For contractors · 6 minute read · Updated 16 October 2026

The honest answer is that it depends. Your IR35 status, your day rate, how long contracts run and how much admin you can stomach all move the result. What follows is a fair way to compare, with numbers.

The comparison

These are annual take-home figures at 5 days a week for 44 weeks, using 2026/27 rates for England, Wales and Northern Ireland. The limited company is outside IR35 with a £12,570 salary, the rest paid as dividends and £1,800 of running costs. The umbrella assumes a £25 weekly margin.

Day rate Umbrella Limited company outside IR35 Difference
£350 £49,115 £53,498 +£4,383
£500 £65,758 £69,082 +£3,324
£650 £77,628 £82,410 +£4,782

Inside IR35 the gap largely closes. At £500 a day, the same limited company inside IR35 would keep about £64,600, slightly below the umbrella figure, because it still carries running costs.

What the numbers do not show

  • Admin and responsibility. A limited company needs accounts, a confirmation statement, payroll for your salary and tax returns. Many contractors pay an accountant for this.
  • Risk. If your status is challenged, a limited company carries the responsibility for getting it right. An umbrella takes the PAYE side off your hands.
  • Cash flow. A limited company lets you decide when to pay yourself. An umbrella pays you on a fixed cycle.
  • Everything outside the example. Pension contributions, student loan repayments, expenses and other income all change the result.

When an umbrella tends to suit

  • Your contract is inside IR35.
  • You want the simplest set-up.
  • Contracts are short, or you move between agencies often.

When a limited company tends to suit

  • Your contract is outside IR35 and likely to stay that way.
  • Your rate is high enough that running costs are small in proportion.
  • You are happy to manage a company, or to pay someone to.

A note on the April 2026 umbrella rules

From 6 April 2026, HMRC can recover an umbrella company’s unpaid PAYE and National Insurance from the agency, and in some cases the end client. That can mean tighter checks and shorter supplier lists. Read our guide to the April 2026 umbrella company rules before you pick or change an umbrella.

How to decide

Compare take-home at your own rate under each route, then check the result against how you actually work. The Paylift app does the first part for you and updates your business structure check as things change.

Estimates only, not financial or tax advice. Speak to an accountant before changing how you work.

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