UK Contractor IR35 Take-Home Calculator
Compare limited company take-home pay inside IR35 vs outside IR35, using real Income Tax, National Insurance, Corporation Tax, and dividend tax rates.
Equipment, software, accountancy fees, and similar costs.
Inside vs Outside IR35 Take-Home
Inside IR35 Take-Home
£53,883
Outside IR35 Take-Home
£59,071
Inside IR35 (deemed employment)
Outside IR35 (limited company)
What Is the UK Contractor IR35 Take-Home Calculator?
IR35 (off-payroll working) rules determine whether a contract worked through a personal limited company should be taxed like genuine self-employment, or like disguised employment. If a contract is assessed as inside IR35, the fee-payer (usually the client or agency) must deduct Income Tax and National Insurance from the contract value roughly as if it were a salary, including deducting Employer National Insurance before the money even reaches you. If it's outside IR35, you can operate your limited company normally — paying yourself a small salary plus dividends, which carries no National Insurance on the dividend portion and is generally more tax-efficient. This calculator shows exactly how much that determination is worth in take-home pay for a given contract value.
This calculator does not determine your IR35 status — that's a legal and factual question about how the engagement actually operates (control, substitution, mutuality of obligation), usually assessed using HMRC's CEST tool or a specialist review. What this calculator does is show the financial consequence once a status has been determined, for either a genuine sole-trader-style comparison (see the UK Freelance vs PAYE Calculator for that scenario) or this limited-company-specific inside/outside comparison.
UK Contractor IR35 Take-Home Calculator Formula
Inside IR35 Take-Home = (Contract − Expenses − Employer NI) − Income Tax − Employee NI
Outside IR35 Take-Home = Net Salary + (Dividends − Dividend Tax)
How Is the UK Contractor IR35 Take-Home Calculator Calculated?
Inside IR35 is modeled as a deemed direct payment: Employer National Insurance (15% above the £5,000 secondary threshold) is calculated on the contract value (after expenses) and deducted first, since this is the fee-payer's cost to bear before the remainder reaches you as a deemed salary — Income Tax and Employee National Insurance are then deducted from that deemed salary using standard PAYE bands.
Outside IR35 is modeled as a single-director limited company with no other employees, paying a director's salary set at the £12,570 Personal Allowance (a common baseline, since single-director companies don't qualify for the Employment Allowance and this salary level avoids Employee NI and Income Tax on the salary itself). Remaining company revenue, after expenses, salary, and the small Employer NI on that salary, is taxed at Corporation Tax (19% up to £50,000 profit, 25% above £250,000, with marginal relief between), then the full remaining profit is assumed extracted as dividends in the same year and taxed at 2026/27 dividend rates (10.75% basic, 35.75% higher, 39.35% additional, after a £500 dividend allowance).
UK Contractor IR35 Take-Home Calculator Example
A £60,000 contract with £2,000 in expenses: Inside IR35 leaves £39,556 take-home after Employer NI, Income Tax, and Employee NI. Outside IR35 leaves £44,645 after Corporation Tax and dividend tax — about £5,090 more.
A £90,000 contract with £3,000 in expenses: Inside IR35 gives £53,883 take-home, versus £59,071 outside IR35 — a gap of about £5,187.
A £150,000 contract with £5,000 in expenses, where the £100,000 Personal Allowance taper reduces the tax-free amount on both sides: Inside IR35 gives £77,134, versus £83,576 outside IR35 — a gap of about £6,441, even with the taper active on both.
How to Use the UK Contractor IR35 Take-Home Calculator
Step 1
Enter your annual contract value (the total the client is paying for your work over the year).
Step 2
Enter your annual allowable business expenses.
Step 3
Compare the Inside IR35 and Outside IR35 take-home figures to see the financial difference a status determination makes.
Step 4
Review the breakdown to see exactly where each deduction — Employer NI, Corporation Tax, dividend tax — comes from.
Benefits
- Uses verified 2026/27 Income Tax, National Insurance, Corporation Tax, and dividend tax rates — including the Autumn Budget 2025 dividend tax increase.
- Shows the full deduction breakdown for both scenarios, not just a single take-home number.
- Applies the £100,000 Personal Allowance taper correctly on both sides for higher contract values.
- Uses a clearly disclosed, standard single-director salary assumption rather than a false sense of personalized optimization.
- Free, instant, and runs entirely in your browser.
Common UK Contractor IR35 Take-Home Calculator Scenarios
Scenario 1
Understanding the financial impact of a client's IR35 status determination on a contract you've been offered.
Scenario 2
Deciding whether to negotiate contract rates differently for an inside-IR35 engagement to offset the take-home difference.
Scenario 3
Comparing a limited company contracting structure against sole trader self-employment or permanent PAYE employment.
Scenario 4
Explaining to a client or agency why an inside-IR35 rate needs to be higher than an outside-IR35 rate for equivalent take-home.
Scenario 5
Planning company profit extraction for a limited company contractor across a tax year.
Understanding Your Result
The gap you see reflects the real financial cost of the IR35 determination itself, not a difference in the underlying work or contract value. Outside IR35 is generally more tax-efficient mainly because dividends carry no National Insurance at all, and Corporation Tax rates (19-25%) are often lower than the combined Employer NI (15%) and Employee NI (8%) that apply inside IR35.
This gap is exactly why many contractors negotiate a higher day rate for inside-IR35 engagements — to partially offset the additional National Insurance cost — and why some clients price outside-IR35 contracts lower, since the worker retains more of the same contract value.
Tips
- If a contract is genuinely inside IR35, negotiating a higher day rate to offset the Employer NI cost is common practice — this calculator's Employer NI figure is a useful reference point.
- This calculator assumes 100% of company profit is extracted as dividends in the same tax year — in practice, many contractors retain some profit in the company across tax years, which changes the effective tax timing.
- The £12,570 director salary assumption is a common baseline, not a personalized recommendation — the genuinely optimal salary level can shift slightly with the Employment Allowance, other income, or multiple directors.
- IR35 status itself isn't something this calculator determines — use HMRC's CEST tool or a specialist review for that, then use this calculator to see the financial consequence.
- Remember that company profit not yet extracted as dividends still needs to fund working capital, VAT, and other business costs before any distribution.
Common Mistakes
- Assuming outside IR35 is always dramatically better — the gap, while real, is often smaller than commonly assumed once Corporation Tax and dividend tax are properly accounted for.
- Not accounting for Employer NI as a real deduction from an inside-IR35 contract value, since it's taken before the deemed salary is calculated.
- Confusing this limited-company comparison with the sole-trader self-employed vs PAYE decision, which has different mechanics — see the UK Freelance vs PAYE Calculator for that.
- Forgetting Corporation Tax entirely when estimating outside-IR35 take-home, and comparing gross company revenue directly to net PAYE salary.
- Not budgeting for the Payments on Account or Corporation Tax payment deadlines that come with operating a limited company.
Frequently Asked Questions
What does 'inside IR35' actually mean?
It means HMRC (or the client's determination) considers the engagement to be functionally equivalent to employment, so tax and National Insurance must be deducted roughly as if you were a direct employee, even though you're working through a limited company.
Who decides whether a contract is inside or outside IR35?
For medium and large private sector clients, the client itself is responsible for making and communicating the determination, usually via a Status Determination Statement. Small clients and some public sector engagements have different rules — this calculator doesn't determine status, only the financial consequence of one.
Why is Employer NI deducted from an inside-IR35 contract before I see any money?
Because inside IR35 treats you as a deemed employee, and the fee-payer must account for Employer National Insurance as part of that deemed employment cost, deducting it before calculating the remaining deemed salary paid to you.
Why does this calculator assume a £12,570 director salary outside IR35?
It's a widely used baseline for single-director limited companies — high enough to build a qualifying National Insurance year and use the full Personal Allowance, but structured to avoid triggering Employee NI, since single-director companies don't qualify for the Employment Allowance that would otherwise offset Employer NI.
Does this account for VAT?
No — VAT is generally a pass-through cost collected from clients and paid to HMRC rather than a direct reduction in take-home profit, so it's outside this calculator's scope on both sides of the comparison.
What if I don't extract all company profit as dividends immediately?
This calculator assumes full extraction in the same year for a clean comparison — retaining profit in the company changes the timing of dividend tax but not the underlying Corporation Tax, which is due regardless of extraction timing.
Does the Corporation Tax calculation account for marginal relief?
Yes — profits between £50,000 and £250,000 use the standard marginal relief formula, producing an effective marginal rate of 26.5% in that band, exactly as HMRC calculates it for a single company with no associated companies.
Why did dividend tax rates change for 2026/27?
The Autumn Budget 2025 raised the basic and higher dividend tax rates by 2 percentage points each (8.75% to 10.75%, and 33.75% to 35.75%), explicitly to narrow the tax gap between employment income and dividend income. The additional rate and the £500 dividend allowance were unchanged.
Does this apply to Scotland's Income Tax bands?
No — this uses the England, Wales, and Northern Ireland Income Tax bands for the salary and deemed-salary portions. National Insurance, Corporation Tax, and dividend tax rates are the same UK-wide regardless of which Income Tax bands apply.
What expenses count as allowable business expenses here?
General limited company running costs like equipment, software, accountancy fees, and business insurance — inside-IR35 engagements have more restricted expense deductibility in practice than this calculator's simplified shared treatment assumes, which is a modeling simplification, not exact HMRC treatment.
Is outside IR35 always the better choice if I have one?
Financially, usually yes based on take-home pay alone, as this calculator shows — but IR35 status isn't a choice you can simply pick; it depends on the genuine working arrangement, and misrepresenting it carries real compliance risk.
Can I share this comparison as an image?
Yes — tap Share and, on supported devices, your result is shared as a branded image card, not just a text link.
References
Important Information
This calculator provides estimates for informational purposes only and is not tax or legal advice, and does not determine your IR35 status. Uses confirmed 2026/27 HMRC Income Tax, National Insurance, Corporation Tax, and dividend tax rates (England/Wales/Northern Ireland); models a single-director limited company with no associated companies and full same-year dividend extraction as a simplifying assumption. Confirm your specific situation with HMRC, your accountant, or a specialist IR35 review.
Last updated: August 2026