Tax Calculate

    IR35 Calculator UK - Inside vs Outside IR35 Take-Home Pay

    Contract Details

    Enter your contract details to compare IR35 scenarios

    IR35 Calculator UK

    Our IR35 calculator helps UK contractors compare take-home pay inside and outside IR35 for the 2026/27 tax year. Enter your day rate, expected working days, business expenses, and IR35 status to estimate annual contract income, monthly take-home pay, Income Tax, National Insurance, Corporation Tax, and dividend tax where relevant.

    Use the page as an inside vs outside IR35 calculator, an inside IR35 take-home calculator, or a day rate calculator when comparing a new contract offer. The result shows how employment-style taxation compares with a limited company structure, so you can see the tax difference before accepting a contract or challenging a determination.

    IR35 outcomes depend on the contract terms and the real working arrangement, not just the tax calculation. This tool focuses on the financial impact; for the status decision itself, check control, substitution, mutuality of obligation, financial risk, and the client's Status Determination Statement.

    Inside vs Outside IR35 Calculator

    Inside IR35 and outside IR35 contracts can produce very different take-home results. Inside IR35 is closer to payroll taxation, while outside IR35 normally uses a limited company structure with Corporation Tax, salary, and dividends.

    If you work in construction rather than through a personal service company, try our CIS deduction calculator to work out Construction Industry Scheme deductions.

    Worked Example: £60,000 Contract Revenue

    Sarah is an IT contractor with £60,000 annual contract income. Let's compare her take-home pay inside vs outside IR35 using our IR35 tax calculator:

    Inside IR35 (Deemed Employment)

    Contract revenue:£60,000
    Business expenses (5% limit):-£3,000
    Taxable income:£57,000
    Less personal allowance:-£12,570
    Taxable after PA:£44,430
    Income tax (20%-40%):-£10,232
    Employee NI (8%-2%):-£3,151
    Take-Home Pay:£43,617
    Monthly:£3,635
    Effective tax rate:27.3%

    Outside IR35 (Limited Company)

    Contract revenue:£60,000
    Business expenses (full):-£3,000
    Taxable profit:£57,000
    Corporation tax (19%):-£10,830
    After corp tax:£46,170
    Salary (secondary threshold):£5,000
    Dividends:£41,170
    Income tax on salary:£0
    NI on salary:£0
    Dividend tax (10.75%):-£3,558
    Take-Home Pay:£42,612
    Monthly:£3,551
    Effective tax rate:29.0%

    IR35 Calculator Result: The Difference

    Inside IR35 take-home:£43,617
    Outside IR35 take-home:£42,612
    Difference in this example:£1,005 per year

    Note: This is a simplified worked example. The exact inside vs outside IR35 difference depends on rate, days worked, company costs, salary and dividend choices, and how the contract is structured. Use the calculator above for your own figures.

    Inside IR35 Take-Home Pay Calculator

    If your client has decided a contract is inside IR35, your take-home pay is usually calculated more like employment income. The fee payer may deduct Income Tax and National Insurance before paying you, and the scope for business expense planning is more limited than it is outside IR35.

    To use this as an inside IR35 take-home calculator, select "Inside IR35" in the calculator, enter your day rate and working days, then compare the annual and monthly take-home pay with the outside IR35 result.

    Inside vs Outside IR35 Take-Home Examples

    Day rate

    £300/day

    Annual contract value at 230 days: £69,000

    Good for comparing lower to mid-range contract offers.

    Day rate

    £400/day

    Annual contract value at 230 days: £92,000

    A common rate where the IR35 difference becomes more visible.

    Day rate

    £500/day

    Annual contract value at 230 days: £115,000

    Higher-rate tax and dividend tax assumptions matter more here.

    These examples are for orientation only. Enter your own rate, working days, and expenses above to get the relevant inside IR35 and outside IR35 comparison.

    IR35 Day Rate Calculator

    Most contractors think in day rates, not annual salary. To convert a day rate into annual contract income, multiply your day rate by the number of days you expect to bill in the year.

    Day Rate to Annual Contract Value

    £250/day
    £57,500 at 230 days
    £300/day
    £69,000 at 230 days
    £400/day
    £92,000 at 230 days
    £500/day
    £115,000 at 230 days

    Contractors often use 220 to 240 working days after allowing for holidays, bank holidays, sickness, and gaps between contracts. If a role moves from outside IR35 to inside IR35, use the calculator to test whether a higher day rate would be needed to preserve your monthly take-home pay.

    IR35 Take-Home Calculator: Higher Rate Contractor Example

    The IR35 tax calculator shows even bigger differences for higher-earning contractors. Here's how our inside vs outside IR35 calculator compares a £100,000 contract:

    £100,000 Contract - Inside vs Outside IR35

    Inside IR35: £65,657 take-home

    • • Income tax: £25,432 (40% rate applies)
    • • NI: £3,911 (employee rate 8%/2%)
    • • Limited expenses (5% cap)
    • • Monthly: £5,471

    Outside IR35: £62,096 take-home

    • • Corporation tax: £20,100 (marginal relief rate)
    • • Dividend tax: £12,804 (10.75% + 35.75%)
    • • Salary at £5,000 (secondary threshold)
    • • Monthly: £5,175

    In this simplified 2026/27 example, inside IR35 produces a higher result at £100k because company tax and dividend assumptions can narrow the outside IR35 advantage. Model your own rate above before making a contract decision.

    Use our IR35 calculator to input your own contract rate and see your personal comparison. At very high contract values (£150k+) where a larger proportion of profits exceed the basic rate threshold, the tax picture can vary significantly. Always use the live calculator above for your specific situation.

    How to Calculate IR35 Tax

    Our IR35 tax calculator automates these calculations, but understanding how to calculate IR35 helps you verify results and plan your contracting structure:

    Calculate Inside IR35

    1. 1Start with contract revenue - Total fees received from clients
    2. 2Deduct limited expenses - Maximum 5% of contract value (covers supervision, office costs)
    3. 3Apply personal allowance - Deduct £12,570 (2026/27)
    4. 4Calculate income tax - 20% up to £50,270, then 40% up to £125,140
    5. 5Calculate employee NI - 8% on £12,570-£50,270, then 2% above
    6. 6Result: Revenue minus tax and NI = inside IR35 take-home pay

    Calculate Outside IR35

    1. 1Start with contract revenue - Total fees to your limited company
    2. 2Deduct full business expenses - Accountancy, software, travel, equipment, insurance, etc.
    3. 3Calculate corporation tax - 19% on profits up to £50k, 25% above (marginal relief applies)
    4. 4Take optimal salary - Usually £12,570 (personal allowance, no income tax/NI)
    5. 5Extract remaining via dividends - After corporation tax profit less salary
    6. 6Calculate dividend tax - 10.75% basic rate, 35.75% higher rate, 39.35% additional rate (after £500 allowance)
    7. 7Result: Salary plus dividends minus all taxes = outside IR35 take-home pay

    Tip: The calculator above performs both calculations from the details you enter. Select your IR35 status to estimate your take-home pay for 2026/27.

    Understanding IR35 - Inside vs Outside IR35 Status

    Inside IR35

    • Taxed closer to employment income
    • Income Tax and National Insurance usually deducted by the fee payer
    • Limited company dividend planning usually not available for that contract
    • Business expense treatment is more limited
    • Take-home pay can be lower depending on the rate and contract terms

    Outside IR35

    • Genuine business-to-business relationship
    • Company profits subject to Corporation Tax
    • Income can be taken as salary and dividends
    • Ordinary business expenses can usually be claimed through the company
    • Requires contract and working practices to support outside IR35 status

    Key IR35 Determination Tests

    Supervision, Direction, and Control (SDC)

    Does the client control how, when, and where you work? If yes, you're likely inside IR35. Outside IR35 means you have control over your working methods, can work flexibly, and decide how to deliver the project.

    Right of Substitution

    Can you send a substitute to do the work without client approval? A genuine right of substitution (actually exercised or genuinely available) points strongly to being outside IR35. Most inside IR35 contracts require you personally to do the work.

    Mutuality of Obligation (MOO)

    Is the client obliged to offer you work, and are you obliged to accept? Employees have MOO. Outside IR35 contractors have the right to refuse work and clients have no obligation to offer ongoing work beyond the current contract.

    Off-Payroll Working Rules (April 2021)

    Large & Medium Clients

    • Client determines IR35 status
    • Client issues Status Determination Statement (SDS)
    • Fee-payer deducts tax/NI if inside IR35
    • Contractor can challenge within 45 days

    Small Companies

    • Contractor determines own IR35 status
    • Small company exemption applies
    • No SDS required from client
    • Contractor responsible for compliance

    IR35 Calculator FAQs

    What is the difference between inside and outside IR35?+
    Inside IR35 means your contract is treated like employment for tax, so Income Tax and National Insurance are deducted from the contract income. Outside IR35 means you are treated as a genuine business through your limited company, usually paying Corporation Tax on company profits and taking income as salary and dividends. The tax difference depends on your day rate, expenses, pension contributions, and company setup.
    How do I use the IR35 calculator?+
    Enter your day rate, the number of days you expect to work, your annual business expenses, and whether the contract is inside or outside IR35. The calculator estimates gross contract income, tax deductions, National Insurance, company taxes where relevant, and annual and monthly take-home pay.
    How much less do you earn inside IR35?+
    Inside IR35 can reduce take-home pay because the contract income is taxed more like employment income and business expense flexibility is limited. The gap is not the same for every contractor. It depends on the day rate, working days, company profits, salary and dividend mix, expenses, and whether employer costs are absorbed by the fee payer or reflected in the contract rate.
    What is an inside IR35 take-home calculator?+
    An inside IR35 take-home calculator estimates how much of your contract income you keep after employment-style Income Tax and National Insurance deductions. It is useful when a client or agency has issued an inside IR35 determination and you want to compare the result with an outside IR35 contract.
    Can I use this as an IR35 day rate calculator?+
    Yes. Enter your daily rate and expected working days per year to convert a day rate into annual contract income. Many contractors use 220 to 240 working days as a rough range after allowing for holidays, bank holidays, sickness, and gaps between contracts.
    Who determines IR35 status - me or my client?+
    For public sector clients and medium or large private sector clients, the client normally determines IR35 status and issues a Status Determination Statement. For small private sector clients, the contractor is usually responsible for assessing IR35 status.
    What are the key IR35 status tests?+
    The main IR35 status factors are control, substitution, and mutuality of obligation. HMRC also looks at financial risk, whether you provide equipment, whether you are part and parcel of the client organisation, and whether the contract reflects the real working arrangement.
    Can I claim expenses if I'm inside IR35?+
    Expense treatment is more limited inside IR35 than outside IR35. Outside IR35, a company can usually deduct ordinary business expenses before Corporation Tax. Inside IR35, the calculation is closer to payroll taxation, so many business expenses do not improve take-home pay in the same way.
    What should I do if I disagree with my IR35 status?+
    Ask the client for the Status Determination Statement and challenge it with evidence, such as substitution rights, control over how the work is delivered, project-based deliverables, and lack of ongoing obligation. The client should respond through its status disagreement process. For high-value contracts, consider specialist IR35 advice.

    Related Tax Calculators

    IR35 decisions affect take-home pay, day rates and employer-style costs, so these calculators are useful comparison points. use the hourly rate calculator to compare day rates and salaries, use the self-employed tax calculator for outside-IR35 style income and use the employer NI calculator for employment cost comparisons.

    Self-Employed Tax
    Tax & NI for sole traders
    Income Tax
    Calculate PAYE take-home pay
    National Insurance
    Employee & employer NI contributions