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Retain 85% of your Income

You will no doubt have seen adverts claiming up to 85% retention of your income. Sadly, this just isn’t possible to achieve legally in the majority of circumstances, unless you plough all but minimum wage into a pension or your expenses are in the region of 50% or greater of your income.

It is possible to increase your net pay through the expenses you claim. Once you have claimed all the expenses that you have legitimately incurred, the only way to increase your net pay more is to claim for expenses that you haven’t incurred. This is however, tax fraud and comes with some hefty penalties.

Have you wondered what your expenses would need to be in order to net 85%? We have put together some examples below so you can see!

Income: 5 days @ £100/day

Your expenses would need to be almost 45% of your income in order to net 85%. This means you would be spending £44.00 per day in expenses, leaving you with only £208.12 disposable income per week. Possible granted…but unlikely.

Income: 5 days @ £300/day

These figures mean you would be spending £170 per day in expenses. Your expenses need to be nearly 60% of your income to achieve 85% retention. Would you be able to prove that you have incurred these expenses?

Income: 21 days @ £600/day

It is increasingly more difficult to net 85% as you earn more. Here your expenses would need to be £366.67 per day – almost impossible I’m sure you will agree!

The idea of keeping 85% of your income sounds fantastic we know, however that, in effect, would mean that you are working for next to nothing. Although you receive tax relief on your expenses, please remember that you have already spent out those costs in the first place. Your disposable income is therefore the net pay figure minus expenses as we have shown in the £100 per day example above.

Netting 85% of your gross pay would immediately ring alarm bells with HMRC and make you more of a target for an investigation – it screams tax avoidance.

Claiming for expenses you haven’t incurred will leave you in big trouble if investigated. You would be expected to pay back all the underpaid tax, a penalty usually of similar value and interest. Unfortunately ignorance isn’t bliss – you won’t be able to excuse yourself by saying you were given bad advice.

ContractorUmbrella is sister company to a specialist firm of accountants, SJD Accountancy, the UK’s largest and most trusted tax accountants for contractors, so you can be sure of the advice we give you. Even if HMRC decide to contact you, you will know that you won’t have claimed anything untoward.

If after reading this page you have any questions or would just like to make a general enquiry, please contact a member of our team on 01206 713680 or email us at

Visit our Online Calculator for a realistic net pay estimate. If you are on the standard tax code for the tax year 2011/12, the net pay figure produced is an accurate estimate of what you can expect to take home.