On £200/day (220 days, £44,000/year revenue), a limited company contractor takes home £2,732/month. Umbrella produces £2,550/month. The £182/month gap — £2,184/year — comfortably exceeds typical accountancy costs, making Ltd the financially stronger choice at this rate.
Take-Home Comparison — £200/Day
| Ltd Company | Umbrella | PAYE | |
|---|---|---|---|
| Annual revenue | £44,000 | £44,000 | £44,000 |
| Gross personal income | £12,570 salary + £22,108 dividends | £37,609 salary | £38,913 salary |
| Income tax | £0 salary; £1,891 dividend tax | £5,008 | £5,269 |
| National Insurance | £0 (employee) | £2,003 | £2,107 |
| Monthly take-home | £2,732 | £2,550 | £2,628 |
| Annual take-home | £32,787 | £30,598 | £31,537 |
Ltd Company Calculation (Outside IR35)
Annual revenue: £44,000
- Director salary: −£12,570
- Employer NI (15% above £5,000): −£1,136
- Ltd expenses: −£3,000
- Taxable profit: £27,294
Corporation tax (19%): £5,186 Profit after CT: £22,108
Dividends:
- First £500 at 0% = £0
- Remaining £21,608 at 8.75% = £1,891
- Net dividends: £20,217
Take-home: £12,570 + £20,217 = £32,787/year = £2,732/month
Umbrella Company Calculation (Inside IR35)
Revenue after umbrella margin: £42,500 Gross salary: (£42,500 + £750) ÷ 1.15 = £37,609
| Deduction | Amount |
|---|---|
| Income tax (20% above £12,570) | £5,008 |
| Employee NI (8% above £12,570) | £2,003 |
| Net take-home | £30,598/year = £2,550/month |
PAYE Calculation
Gross salary: (£44,000 + £750) ÷ 1.15 = £38,913
- Income tax: £5,269
- Employee NI: £2,107
- Take-home: £31,537/year = £2,628/month
Is Ltd Worth It at £200/Day?
Annual take-home gain: £2,189 (Ltd vs umbrella)
With accountancy at ~£1,000/year, you’re £1,189/year ahead through Ltd — and that gap grows every year. At £200/day, running a limited company makes financial sense for anyone contracting for 6+ months of the year.
The key questions to ask:
- Is your contract outside IR35? (Essential for the dividend model)
- Do you have a fixed-cost accountant? (Look for £800–£1,200/year flat-fee packages)
- Are you likely to be contracting for 2+ years? (Setup costs amortise quickly)
Worked Example — Sara, Mid-Level Developer Contractor
Sara is a mid-level web developer contracting at £200/day through her limited company, outside IR35. Annual revenue: £44,000.
Company financial year:
- Revenue: £44,000
- Salary cost (incl. employer NI): £13,706
- Expenses: £3,000
- Profit: £27,294
- CT (19%): £5,186
- Retained for dividends: £22,108
Sara’s personal income:
- Salary: £12,570 (no income tax, no employee NI)
- Dividends: £22,108 gross; tax: £1,891
- Monthly take-home: £2,732
Her umbrella-using peer on the same rate takes home £2,550/month. Sara is £2,184/year ahead, paying £1,100/year to her accountant — net benefit: £1,084/year, plus she builds retained profit for future flexibility.
£200/Day in Context — Is It a Good Rate?
£200/day (£44,000 annual revenue on 220 days) sits in the lower-mid range of UK contractor day rates. As of 2026:
| Day rate | Market context |
|---|---|
| Under £150/day | Entry-level IT support, junior admin roles |
| £150–£250/day | Mid-level technical and professional roles |
| £250–£400/day | Senior specialists, experienced developers, finance consultants |
| £400–£600/day | Principal/architect level, specialist niches |
| £600+/day | Executive, rare skillsets, financial services |
At £200/day the annual revenue (£44,000) is close to the UK median full-time salary — but contractor take-home is typically higher due to the Ltd dividend model, and you have no employer pension, sick pay, or holiday pay built in. Factor those costs into your rate when comparing to permanent offers.
Expenses at £200/Day
One advantage of the Ltd company structure (outside IR35) is the ability to claim legitimate business expenses tax-free:
| Expense | Allowed? |
|---|---|
| Home office (use-of-home allowance or apportioned costs) | Yes |
| Travel to client sites (not same site every day) | Yes |
| Professional subscriptions | Yes |
| Training and professional development | Yes |
| Accountancy fees | Yes |
| Equipment (laptops, peripherals) | Yes (capital allowances) |
| Business mobile phone | Yes (if company-owned) |
| Client entertainment | No (not deductible for CT) |
At £200/day, the ability to run legitimate expenses through the company adds meaningful value — a contractor spending £3,000/year on home office, equipment, and subscriptions saves £570 in Corporation Tax (19% on £3,000) vs taking it as salary.