IR35 calculator (UK)

What this calculator assumes (read this bit)

Real contractor tax depends on your full circumstances, so this calculator deliberately simplifies. It is a planning estimate, not advice from an accountant. The assumptions:

• Outside IR35: director salary of £12,570, no other company costs or expenses, employer NI at 15% on the salary (no Employment Allowance for a sole director), corporation tax at 19% to 25% with marginal relief, and all remaining profit paid out as dividends in the same year.
• Inside IR35: umbrella margin then 15% employer NI come off the assignment rate. The apprenticeship levy (0.5%) and holiday pay mechanics are ignored, which flatters the inside number slightly.
• Pension: treated as a company contribution outside IR35 and salary sacrifice inside IR35 and for the permanent salary. Pension money is excluded from take home but it is still yours.
• Permanent salary: compared at the headline salary. Employer NI, employer pension and paid holiday sit on top of a salary, which is why a lower salary can beat a similar contract rate.
• Rates: England and Northern Ireland tax bands for 2026/27, personal allowance taper above £100,000, dividend allowance £500. Rates last checked: 15 July 2026.

How the inside vs outside IR35 maths works

• Contract value: day rate × 5 days × billable weeks. 46 weeks is a sensible default that allows for holidays and gaps between contracts.
• Outside IR35 (limited company): contract value minus salary, employer NI and pension leaves company profit. Corporation tax comes off, the rest is dividends, and you pay dividend tax personally at 8.75%, 33.75% or 39.35%.
• Inside IR35 (umbrella): the umbrella margin and employer NI at 15% come off the assignment rate first. What is left is your gross pay, taxed like a salary with income tax and 8% employee NI.
• The gap: on mid-range day rates the outside route typically keeps 5% to 10% more of the contract value, mainly because dividends avoid NI. The gap narrows as rates rise and dividend tax bites.

How much take home pay do I keep inside IR35?

Roughly 55% to 65% of the contract value for most day rates, once the umbrella margin, employer National Insurance, income tax and employee National Insurance all come off the assignment rate. On £500 a day over 46 weeks (about £115,000) this calculator's simplified model shows around £68,000 take home inside IR35.

What is the difference between inside IR35 and outside IR35?

Inside IR35 means HMRC treats the engagement like employment, so you are paid through PAYE, usually via an umbrella company, with employer NI effectively coming out of the assignment rate. Outside IR35 means you can work through your own limited company, take a small salary plus dividends, and typically keep more of the contract value.

How is outside IR35 take home calculated through a limited company?

The common approach is a director salary at the personal allowance (£12,570), corporation tax on the remaining profit at 19% to 25%, and the rest paid as dividends taxed at 8.75%, 33.75% or 39.35%. This calculator follows that structure and ignores other company costs, so treat it as a planning estimate.

What does an umbrella company deduct from my day rate?

From the assignment rate the umbrella deducts its weekly margin (often £15 to £30), employer National Insurance at 15% above £5,000, and usually the apprenticeship levy. What is left is your gross pay, which then has income tax, employee NI and any pension taken off like a normal salary.

What permanent salary is equal to a contract day rate?

There is no fixed rule. A permanent salary has employer NI, pension, holiday and sick pay paid on top by the employer, while a contract rate has to cover all of that itself. Use the permanent salary field in this calculator to test a real job offer against your contract take home rather than relying on a multiplier.

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