IR35 Calculator UK
Compare your take-home pay inside and outside IR35 — Ltd company, umbrella and employee PAYE side by side. Updated for 2026/27.
This calculator provides estimates only. IR35 status is a complex legal determination. This tool shows the financial impact of different scenarios — it does not determine your IR35 status. Always seek advice from a qualified contractor accountant or IR35 specialist.
Using 2026/27 figures
These figures show gross contract value entering each structure. For outside IR35, the full — enters your limited company. For inside IR35, employer NI (15% above £5,000) is deducted from the gross before you receive any pay — this is why the taxable base is lower for PAYE scenarios.
How is each scenario calculated?
Outside IR35 — Ltd company
Your gross contract income enters your limited company. Corporation tax is applied (19% on profits up to £50,000, 25% above). You pay yourself an optimal salary of £5,000 (equal to the employer NI secondary threshold) to avoid NI while preserving your personal allowance. The remainder is paid as dividends. Dividend tax applies above the £500 annual allowance.
Inside IR35 — Umbrella
The umbrella company receives your contract rate, deducts employer NI (15% above £5,000 per employee per year) and their weekly margin, then pays you as an employee with income tax and employee NI deducted at source.
Inside IR35 — Employee PAYE
Similar to umbrella but without the umbrella margin. Employer NI is deducted from the gross contract value, and you receive the remainder as a salary with income tax and employee NI deducted.
Important caveats
These calculations are simplified estimates. They do not account for allowable business expenses, pension contributions, the employment allowance, student loan repayments, or your specific tax position. The optimal salary and dividend strategy assumes no other income.
Common questions
What is IR35?
IR35 is UK tax legislation designed to prevent contractors from avoiding income tax and National Insurance by operating through a limited company when they would otherwise be classified as employees. If your contract falls inside IR35, you pay tax as if you were an employee. If outside, you can pay yourself a combination of salary and dividends through your limited company.
How much less do you take home inside IR35?
The difference varies by income level but is typically £5,000 to £15,000 per year less inside IR35. At higher day rates the gap can be larger. Use this calculator to see the exact difference for your day rate.
What is the difference between umbrella and PAYE inside IR35?
Both result in income tax and National Insurance being deducted at source. Umbrella companies charge a weekly margin (typically £15–30) and handle employer NI on your behalf. Take-home is similar to direct PAYE but slightly lower due to the umbrella margin.
Who decides if a contract is inside or outside IR35?
Since April 2021, medium and large private sector clients determine IR35 status. Small companies (two of: turnover under £10.2m, balance sheet under £5.1m, fewer than 50 employees) are exempt — the contractor decides their own status. Public sector clients have been responsible since 2017.
Can I appeal an inside IR35 determination?
Yes. Clients must provide a Status Determination Statement (SDS). Contractors can formally disagree and the client must respond within 45 days. HMRC's CEST tool can be used to check status, though it is not legally binding.
This calculator provides estimates only and does not constitute tax, legal or financial advice. IR35 status is a complex legal determination that depends on the specific terms and working practices of your contract — not just the financial outcome. Always seek advice from a qualified contractor accountant or IR35 specialist. Rates shown are for 2026/27.
Need an IR35 specialist accountant?
SJD Accountancy and Gorilla Accounting both specialise in contractor tax — including IR35 reviews, status determinations and limited company setup.
Find a contractor accountant →