Free tool · 2026/27

The same money, four ways

Employed, self-employed, through your own company, or via an umbrella. The income tax is nearly identical in all four — the difference is employer NI, Class 4, corporation tax and dividend tax, and it is worth far more than any band.

Income a year

Salary, or revenue / day rate

Employee

PAYE. Your employer pays their NI on top of your salary, not out of it.

£76,157

kept a year · 36.5% lost to tax

Income tax: −£39,432
Employee NI: −£4,411

Sole trader

Most kept

Self-employed. Income tax plus Class 4 NI on profit after expenses.

£76,911

kept a year · 35.9% lost to tax

Income tax: −£39,432
Class 4 NI: −£3,657

Own limited company

Small salary plus dividends. Corporation tax first, dividend tax second.

£73,902

kept a year · 38.4% lost to tax

Corporation tax: −£26,725
Dividend tax: −£19,373

Umbrella / inside IR35

Employer NI and the umbrella's margin come out of your assignment rate.

£69,962

kept a year · 41.7% lost to tax

Umbrella margin: −£1,500
Employer NI: −£14,804
Income tax: −£29,649
Employee NI: −£4,085

Why they differ. An employer pays their 15% NI on top of your salary. An umbrella pays it out of your assignment rate, so the same number is worth noticeably less. A sole trader pays Class 4 at 6% rather than Class 1 at 8%. A company pays corporation tax first — 19% up to £50,000 and an effective 26.5% on the slice to £250,000 — and then you pay dividend tax on what is left.

Incorporating is no longer an automatic win. With the 2026/27 dividend rates of 10.75% and 35.75%, distributing everything you earn through a company usually loses to being a sole trader. The advantage now comes from not drawing it — leaving profit in the company defers the dividend tax. Move the draw slider to see the answer flip.

What this ignores. IR35 status determination, VAT and the flat-rate scheme, the trading allowance, splitting income with a spouse, Business Asset Disposal Relief on winding up, and the real administrative cost of running a company. Scotland sets its own income tax bands and is not covered.

2026/27 rates for England, Wales and Northern Ireland. Assumes a standard tax code and no other income beyond what you enter. For planning, not for filing — and not tax advice.