Inside or outside IR35: what a day rate really pays
This IR35 calculator turns a UK contractor’s day rate into take-home pay two ways, side by side, for the 2026/27 tax year. Inside IR35 you are taxed like an employee: through an umbrella company the employer’s National Insurance, the Apprenticeship Levy and the umbrella’s margin all come out of your assignment rate before PAYE income tax and NI. Outside IR35 your own limited company keeps the fees, pays you a small salary, pays Corporation Tax on its profit and passes the rest to you as dividends.
You see the yearly and monthly take-home for both, the share of the fees you keep, and the inside-IR35 day rate that would leave you as well off as working outside it. The calculator also picks the director’s salary (£5,000, £6,708 or £12,570) that leaves the most in your pocket. It runs in your browser using GOV.UK rates; it is an estimate, not tax advice, and it does not decide your IR35 status.
How to use the IR35 Calculator
- Enter your day rate and the days you expect to bill in a year, and choose where you live (Scottish taxpayers pay Scottish income tax on salary).
- Inside IR35: choose an umbrella company and enter its weekly margin and whether it deducts the 0.5% levy — or a PAYE rate where the agency pays employer NI on top.
- Outside IR35: enter the company’s yearly expenses, the director’s salary (or let the calculator pick) and how much of the profit after tax you take as dividends.
- Compare the headline difference, the side-by-side table and the bars showing where the fees go.
- Press Copy the comparison to keep the figures.
IR35 Calculator features
Umbrella or PAYE rate
Solves for gross pay after margin, 15% employer NI above £5,000 and the levy, or treats a PAYE rate as gross pay.
Limited company maths
Salary, employer NI, Corporation Tax with marginal relief, then dividends at 10.75%, 35.75% and 39.35% after the £500 allowance.
Best director’s salary
Compares £5,000, £6,708 and £12,570 and uses whichever pays most, or any amount you type.
Break-even day rate
The inside-IR35 rate that matches your outside-IR35 take-home.
Scotland and the £100,000 taper
Scottish bands on salary and PAYE pay; dividends always use UK rates; the Personal Allowance taper applies to salary plus dividends.
How the two routes are calculated
Inside IR35 (umbrella): fees − margin = the pot the umbrella pays from. Gross pay G satisfies G + 15% × (G − £5,000) + 0.5% × G = pot; income tax and employee NI (8% from £12,570 to £50,270, 2% above) then come off G. PAYE rate: the whole rate is gross pay and the fee-payer pays employer NI on top.
Outside IR35: profit = fees − expenses − salary − employer NI on the salary. Corporation Tax is 19% up to £50,000 of profit, 25% from £250,000, and in between 25% less marginal relief of 3/200 × (£250,000 − profit). Profit after tax is paid as dividends, taxed on top of the salary: the first £500 at 0%, then 10.75% in the basic-rate band, 35.75% in the higher-rate band and 39.35% above £125,140.
Worked example (the default): £500 a day for 220 days is £110,000. Through an umbrella charging £20 a week plus the levy, gross pay is £94,987 and take-home £65,650. Through a limited company with £1,500 of expenses and a £12,570 salary, profit is £94,795, Corporation Tax £21,371 and dividends £73,424, taxed £16,770 — take-home £69,224, about £3,574 more. Matching that inside IR35 needs about £535.52 a day.
Who decides IR35 status
Medium and large clients, and every public-sector body, decide whether the off-payroll working rules apply and give you a status determination statement; for small private-sector clients your own company decides. Inside IR35 the fee-payer deducts tax and NI and pays employer NI and, where due, the Apprenticeship Levy. The rules apply contract by contract. Rates used here as of 24 October 2026; check GOV.UK for later changes.
Limits of the estimate
- One full tax year at one rate, a 12-month accounting period and no associated companies (which would lower the Corporation Tax limits — see the marginal relief calculator).
- No student loans, pension contributions, VAT, expenses you claim personally or other income. Employment Allowance cannot be used by a company whose only employee paid above £5,000 is its sole director.
- Umbrella margins and levy charges vary; enter your umbrella’s own figures. Holiday pay is part of the umbrella’s gross pay, not an extra.
- For an ordinary job use the UK take-home pay calculator; for dividends alone, the dividend tax calculator; to set a rate from an income goal, the freelance rate calculator.
IR35 Calculator FAQ
How much do I take home on £500 a day inside IR35?
About £65,650 a year (£5,471 a month) over 220 days through an umbrella charging £20 a week plus the 0.5% levy, in England in 2026/27. On a PAYE rate where the agency pays employer NI on top, about £72,357.
How much is £500 a day outside IR35?
About £69,224 a year through a limited company with £1,500 of expenses, a £12,570 salary and all profit after Corporation Tax paid as dividends.
What is the best director’s salary for 2026/27?
With the employer NI threshold at £5,000, a £12,570 salary usually leaves the most take-home for a one-person company because the extra salary saves more Corporation Tax than it costs in employer NI. The calculator compares £5,000, £6,708 and £12,570 for your figures.
What is the 2026/27 dividend tax rate?
10.75% in the basic-rate band, 35.75% in the higher-rate band and 39.35% for additional-rate taxpayers, after a £500 dividend allowance.
Does an umbrella company take employer NI from my rate?
Usually yes: the assignment rate has to cover the umbrella’s employer NI (15% above £5,000 a year), its margin and often the 0.5% Apprenticeship Levy before your gross pay is set.
Is this calculator tax advice?
No. It is an estimate from published GOV.UK rates. Your status and the best way to work depend on your contracts — speak to an accountant.