About the UK IR35 Calculator
This IR35 calculator compares what a UK contractor keeps from the same day rate in two situations for the 2026/27 tax year (6 April 2026 to 5 April 2027). Inside IR35, the engagement is taxed like employment: the day rate is paid through an umbrella company or the fee-payer’s payroll, employer National Insurance and the apprenticeship levy usually come out of the rate, and you pay PAYE income tax and employee NI on what is left. Outside IR35, your limited company keeps the fee, pays you a small salary, pays corporation tax on its profit and distributes the rest as dividends.
It is built for contractors weighing up an inside-IR35 role against an outside one, negotiating a higher rate to compensate for an inside determination, or checking whether running a limited company is still worth it after the 2026/27 dividend tax rise to 10.75% and 35.75%. The result also shows the inside day rate you would need to match your outside take-home pay.
Assumptions: England, Wales or Northern Ireland income tax bands; employer NI at 15% above the £5,000 secondary threshold; no Employment Allowance (a company whose only employee is its director cannot claim it); corporation tax at 19% up to £50,000 of profit, 25% above £250,000 with marginal relief between; all profit paid out as dividends in the same tax year; no pension contributions, student loans or other income.
With the default inputs, the extra take-home outside ir35 (per year) is £3,317.57. Change any value above to recalculate instantly.
How to use the uk ir35 calculator
- 1Enter your day rate and how many days you expect to bill in the year.
- 2For inside IR35, add the umbrella margin and whether the apprenticeship levy is passed on.
- 3For outside IR35, add your company running costs and the salary you pay yourself.
- 4Compare the two take-home figures and the extra amount kept outside IR35.
- 5Use the match rate to negotiate an inside-IR35 rate that leaves you no worse off.
Formula and method
Inside IR35 the calculator treats the assignment rate R (day rate × days) as the umbrella company’s income. After its margin, the umbrella must fund your gross salary G, employer National Insurance at 15% of pay above the £5,000 secondary threshold and, if ticked, the 0.5% apprenticeship levy, so G is solved from that equation. Your salary then pays income tax (20% / 40% / 45% after the £12,570 personal allowance, which tapers above £100,000) and employee NI at 8% between £12,570 and £50,270 and 2% above.
Outside IR35 your company pays your director salary and employer NI on it, deducts running costs, and pays corporation tax on the remaining profit: 19% up to £50,000, 25% above £250,000, and 25% less marginal relief of 3/200 × (£250,000 − profit) in between. Everything left is paid as dividends. Dividends sit on top of your salary: the first £500 is covered by the dividend allowance, then 10.75% applies within the basic-rate band, 35.75% in the higher-rate band and 39.35% above £125,140. The match rate is found by searching for the inside day rate whose take-home equals the outside figure.
- R
- Contract income: day rate × days billed
- G
- Gross PAYE salary paid by the umbrella inside IR35
- Marginal relief
- 3/200 × (£250,000 − taxable profit) for profits £50,000–£250,000
Worked examples
£500 a day for 220 days
Inside IR35 the £110,000 fee less a £1,000 margin funds a £95,021.65 salary after employer NI and levy; tax of £25,440.66 and NI of £3,911.03 leave £65,669.95. Outside, the company pays a £12,570 salary, £1,135.50 employer NI and £2,000 costs, then £21,238.04 corporation tax on £94,294.50 profit; after £16,638.93 of dividend tax you keep £68,987.52 — £3,317.57 more.
£350 a day for 230 days
The £80,500 fee less the margin becomes a £69,480.52 inside salary; after £15,224.21 tax and £3,400.21 NI you take home £50,856.10. Outside, profit of £64,794.50 bears £13,420.54 corporation tax (marginal relief applies), and £51,373.96 of dividends cost £8,887.44 in dividend tax, leaving £55,056.52 — about £4,200 more.
£700 a day, no levy deduction
Without the levy, £153,000 after the margin funds a £133,695.65 salary. Above £125,140 the personal allowance is gone, so tax is £46,366.04 and NI £4,684.51, leaving £82,645.10. Outside, £32,898.04 of corporation tax and £30,446.29 of dividend tax leave £85,723.52 — the gap narrows to about £3,078 at this level.
Frequently asked questions
What does inside IR35 mean?+
Inside IR35 means HMRC would treat the engagement as employment if you were hired directly. The fee-payer (or your umbrella) must deduct PAYE income tax and National Insurance as if you were an employee, so you lose the corporation-tax-and-dividend route a limited company normally offers.
Who decides whether a contract is inside or outside IR35?+
Since April 2021 medium and large private-sector clients, and all public-sector bodies, decide the status and must issue a Status Determination Statement. For small private-sector clients the contractor’s own company still makes the assessment. HMRC’s CEST tool can help.
Why is employer National Insurance taken from my day rate inside IR35?+
Umbrella companies are the legal employer, so they owe 15% employer NI above £5,000 a year and usually the 0.5% apprenticeship levy. They fund those costs from the assignment rate, so your gross salary is noticeably lower than the rate the agency pays.
How much more do I need inside IR35 to match outside?+
Less than many people expect once employer NI and corporation tax are counted. With this calculator’s default costs, matching outside take-home needs roughly 1%–15% more inside across day rates of £300–£1,000 — for example about £532 to match £500 a day over 220 days. The calculator searches for the exact inside rate for your own figures.
Did dividend tax go up in 2026/27?+
Yes. From 6 April 2026 the ordinary dividend rate rose from 8.75% to 10.75% and the upper rate from 33.75% to 35.75%; the additional rate stays at 39.35%. The dividend allowance remains £500, which narrows the outside-IR35 advantage.
Can I claim expenses inside IR35?+
Generally no. Inside IR35 you are taxed like an employee, so travel to a single workplace and most business costs are not deductible, whereas an outside-IR35 company can deduct allowable costs before corporation tax.
Tax results are estimates based on published rules and simplified assumptions. They are not tax advice — check official guidance or a tax professional for your situation.