Contractor Take-Home Calculator (IR35) United Kingdom

For a UK contractor, IR35 status has more effect than anything else on what you keep from a day rate: it decides whether HMRC treats the engagement as employment (inside) or as genuine self-employment through your own company (outside). This calculator shows both outcomes side by side for 2026/27, so you can see what an inside-IR35 determination costs and value a contract on its net figure.

Inside IR35: the umbrella route

Inside IR35 you are taxed broadly like an employee, usually through an umbrella company. The umbrella receives the assignment rate and pays employer National Insurance (15% above a £5,000 threshold), and often the apprenticeship levy, out of it before working out your gross pay, so those costs come from your rate. You then pay Income Tax and employee National Insurance on the gross. Take-home ends up close to an ordinary employee on the equivalent salary, with little room to reduce it. The calculator works the employer NI back out of the assignment rate to show a realistic umbrella take-home.

Outside IR35: the limited company route

Outside IR35 you can work through your own limited company and choose how to take the money. The usual approach is a small salary, typically at the personal allowance so it is free of Income Tax and employee NI and deductible against Corporation Tax, with the remaining profit paid as dividends. The company pays Corporation Tax on its profit (19% up to £50,000, 25% above £250,000, with marginal relief in between), and you pay dividend tax on the dividends, which carry no National Insurance. That NI saving is why working outside IR35 usually leaves you with more, though higher Corporation Tax and the 2026/27 rise in dividend rates have narrowed the gap.

Why the difference matters

For the same day rate, the gap between inside and outside IR35 can be several thousand pounds a year, which is why IR35 status is negotiated so hard. An inside determination turns a dividend structure into fully taxed employment income, employer NI included. Knowing the size of the gap helps you judge whether an inside-IR35 contract at one rate beats an outside one at a lower rate, or whether to ask for a higher rate to compensate.

A worked example

A £500 day rate over 220 billable days is an annual contract value of £110,000. Inside IR35 through an umbrella, after employer NI comes out and Income Tax and employee NI are paid, take-home is about £66,414. Outside IR35 through a limited company on a £12,570 salary, the company pays about £21,768 of Corporation Tax, and the dividends attract about £17,164 of dividend tax, leaving take-home of about £69,932, some £3,518 more. At lower rates the outside advantage is often proportionally larger: at £300 a day it is about £4,931 on £66,000, because more of the income stays in the basic dividend band.

How to use the calculator

Enter your day rate and the number of billable days you expect in a year. Use the advanced option to set the director’s salary for the limited company route. The result shows your annual contract value, take-home outside and inside IR35, the difference, the monthly equivalents, and the Corporation Tax and dividend tax under the outside route. Use it to compare umbrella and limited company offers, to price an inside-IR35 role or to decide how to structure your contracting.

Assumptions and limitations

This is a planning estimate, not advice, using 2026/27 rates. Inside IR35 it excludes the umbrella’s margin and the apprenticeship levy. Outside IR35 it excludes expenses, pension contributions, VAT and the flat rate scheme, the Employment Allowance (a company whose only employee is its director cannot claim it), accountancy fees and the timing of dividends. It assumes the director takes all available profit as dividends in the year, with the salary you choose. It does not determine your IR35 status, which depends on the working practices of each engagement, and it does not model Scottish Income Tax bands (dividend tax and NI are UK-wide). All rates and thresholds are stored as parameters sourced from HMRC and reviewed each tax year.

About This Tool: Contractor Take Home Calculator IR35

Contractor take home calculator IR35: use this tool to get an instant, accurate estimate. The figures follow official GOV.UK guidance and every rate and threshold is kept up to date for 2026. Adjust the inputs above to match your situation, or browse all our calculators to plan your next step.