Umbrella vs limited company after IR35
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For a caught contract the practical choice collapses to umbrella vs limited company running the deemed-payment calculation. Most contractors find the umbrella simpler; the money difference is usually small once the accountant is factored in.
The numbers (2026/27, engine-verified)
Our calculator computes both routes from the same day rate using the verified 2026/27 constants — personal allowance £12,570, employee NI 8%/2%, employer NI 15% above £5,000. Typical result at £500/day: umbrella take-home ≈ {UMB500} vs the LTD outside-IR35 route ≈ {LTD500} — the gap is the price of being caught.
When the limited company still wins
If you mix caught and uncaught contracts, keep the LTD: uncaught income retains the dividend route, and the caught income flows through the same company under deemed-payment rules. Purely inside-IR35 portfolios usually justify the umbrella's simplicity instead.
See also: umbrella due-diligence checklist · what inside IR35 means
Running both at once: the mixed portfolio
The classic 2026 setup is an LTD that holds one caught engagement (via deemed payment) plus one or two outside contracts (full dividend route). The company doesn't split; the tax treatments attach to the engagements. Practicalities: separate ledger codes, the accountant needs to know at offer stage, and time them so the caught engagement's PAYE doesn't surprise the quarterly cashflow.
Umbrella perks that actually have value
Ignore the "employee benefits" pitch until you price them: statutory holiday pay is already accrued inside the rate (it's your money, not a perk), but genuine sick-pay schemes, income protection or enhanced pension matching can be worth real money if you'd buy them anyway. Value them, then compare total packages with the calculator's net figures.
The one question to ask an umbrella
"Show me a worked payslip for a £600/day assignment" — margins, employer NI, pension and the net all visible in one artefact. Anything obscured is margin. Cross-check the net against the 2026/27 tables before signing; the full checklist covers the rest.
Joint-employment and the umbrella's role
The umbrella employs you; the agency engages the umbrella; the end client supervises the work. That triangle is why umbrella workers get statutory pay mechanics without employment rights against the client — the rights route runs through the umbrella's contract, so read what it promises (SSP duration, enhanced family pay, notice) rather than what the recruiter paraphrases. The checklist turns this into tick-boxes.
What to do with the LTD while inside-IR35
Dormant-company filing keeps it warm for the next outside engagement (and preserves the trading history lenders and clients like). Alternatively run the caught engagement through it under deemed payment if the fee-payer agrees — the mechanics are more paperwork than the umbrella, occasionally better net after the accountant fee. Both routes price out in the calculator; the decision is usually admin tolerance, not tax.
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