Tax Calculations
Compare how your earnings are taxed under Standard PAYE employment versus Limited Company PAYE arrangements with real examples and calculations.
Income Tax
- Personal Allowance: £12,570
- Basic Rate: 20% (£12,571 - £50,270)
- Higher Rate: 40% (£50,271 - £125,140)
National Insurance
- Employee: 12% (£12,570 - £50,270)
- Employer: 13.8% (above £9,100)
- Class 1 NI threshold: £12,570
Corporation Tax
- Small profits rate: 19% (up to £50,000)
- Main rate: 25% (over £250,000)
- Marginal rate: 26.5% (£50,001 - £250,000)
Calculation Examples
See how £900 gross earnings are taxed under different employment structures
Before any deductions
Limited expense claims for employees
- • Travel between work locations: £8.00
- • Professional subscription: £4.00
£900.00 - £12.00 expenses
Tax & National Insurance:
After all deductions
Additional Benefits:
- • Holiday pay included (12.07%): £108.63
- • Employer pension contribution (3%): £26.64
- • Full employment rights protection
- • Statutory sick pay entitlement
Payment received by limited company
Legitimate business expenses
- • Travel between clients: £45.00
- • Professional development: £35.00
- • Equipment & tools: £20.00
- • Professional subscriptions: £12.00
£900.00 - £112.00 expenses
Tax & National Insurance:
After all deductions
Company Position:
No corporation tax due as employer NI exceeds remaining funds
Standard PAYE
Take-home pay
- Holiday pay included
- Employer pension contribution
- Full employment rights
Limited Company PAYE
Take-home pay
- Higher expense allowances
- Professional image
- IR35 compliant
Key Differences:
Standard PAYE Advantages:
- • Higher take-home pay (£23.60 more)
- • Holiday pay automatically included
- • Employer pension contributions
- • Full employment law protection
- • No company administration
Limited Company Advantages:
- • Higher allowable expenses (£100 more)
- • Professional business image
- • Potential for business growth
- • Greater expense flexibility
- • IR35 compliant structure
These are illustrative examples
Actual calculations may vary based on your specific circumstances, annual earnings, and other factors.
Expense claims must be legitimate
All expenses must be "wholly, exclusively, and necessarily" for business purposes and properly documented.
Annual calculations differ
These weekly examples don't account for annual allowances, which may affect the overall tax position.
Professional advice recommended
Always seek professional advice for your specific situation and ensure compliance with all regulations.
Need Help with Tax Calculations?
Our experts can help you understand your tax position and choose the most suitable employment structure for your circumstances.