IR35 Calculator 2026/27: Inside vs Outside Take-Home

	Inside IR35	Outside IR35
Contract income	£110,000	£110,000
Employer National Insurance	−£13,633	−£1,136
Apprenticeship Levy	−£479	n/a
Corporation Tax	n/a	−£21,768
Income tax on pay	−£25,787	£0
Employee National Insurance	−£3,928	£0
Tax on dividends	n/a	−£17,164
Take-home a year	£66,172	£69,932
Take-home a month	£5,514	£5,828
Share of income you keep	60.16%	63.57%

How the two figures are calculated

Both columns start from the same contract income.

Contract income = day rate × days worked a year

Inside IR35

Employer costs come out of the rate. In the default setting you are paid through an umbrella company. It takes employer National Insurance (15% of pay above £5,000) and the Apprenticeship Levy (0.5% of pay) out of the assignment rate. What is left is your gross pay.
Gross pay = (contract income + £750) ÷ 1.155
PAYE is taken from gross pay. Income tax uses the £12,570 Personal Allowance and the normal bands. Employee National Insurance is 8% between £12,570 and £50,270, and 2% above.

Outside IR35

The company pays you a salary. The default is £12,570. The company pays employer National Insurance on the part above £5,000.
The company pays Corporation Tax on its profit. Profit is income minus salary and employer National Insurance. The rate is 19% up to £50,000 and 25% from £250,000. In between, Marginal Relief applies.
Corporation Tax = 25% × profit − 3/200 × (£250,000 − profit)
The rest is paid to you as dividends. The first £500 of taxable dividends is tax-free. Above that the rates are 10.75% in the basic rate band, 35.75% in the higher rate band and 39.35% in the additional rate band. Dividends are added on top of your salary to find the band.

Worked examples

Each example is 220 days a year, England, Wales or Northern Ireland, with a £12,570 salary outside and an umbrella company inside.

£350 a day

Contract income of £77,000. Outside, the company's profit is taxed partly with Marginal Relief.

Contract income£77,000
Inside: employer National Insurance and levy−£9,684
Inside: income tax and employee National Insurance−£17,715
Inside: take-home£49,601
Outside: employer National Insurance on the salary−£1,136
Outside: Corporation Tax−£13,023
Outside: personal tax on salary and dividends−£8,493
Outside: take-home£54,348
Difference a year£4,747

£500 a day

Contract income of £110,000. Outside, a large part of the dividends is taxed at the higher dividend rate.

Contract income£110,000
Inside: employer National Insurance and levy−£14,113
Inside: income tax and employee National Insurance−£29,715
Inside: take-home£66,172
Outside: employer National Insurance on the salary−£1,136
Outside: Corporation Tax−£21,768
Outside: personal tax on salary and dividends−£17,164
Outside: take-home£69,932
Difference a year£3,760

£700 a day

Contract income of £154,000. Outside, total income passes £100,000, so the Personal Allowance starts to shrink.

Contract income£154,000
Inside: employer National Insurance and levy−£20,017
Inside: income tax and employee National Insurance−£51,185
Inside: take-home£82,797
Outside: employer National Insurance on the salary−£1,136
Outside: Corporation Tax−£33,428
Outside: personal tax on salary and dividends−£33,099
Outside: take-home£86,337
Difference a year£3,540

Inside vs outside IR35 by day rate

Take-home pay a year for 220 days, 2026/27, England, Wales and Northern Ireland. Inside: umbrella company, employer National Insurance and Apprenticeship Levy taken from the rate. Outside: £12,570 salary, all remaining profit as dividends.
Day rate	Contract income	Inside IR35	Outside IR35	Difference a year	Difference a month
£250	£55,000	£38,273	£42,477	£4,204	£350
£300	£66,000	£44,077	£49,154	£5,077	£423
£350	£77,000	£49,601	£54,348	£4,747	£396
£400	£88,000	£55,124	£59,543	£4,418	£368
£450	£99,000	£60,648	£64,737	£4,089	£341
£500	£110,000	£66,172	£69,932	£3,760	£313
£550	£121,000	£70,614	£75,127	£4,513	£376
£600	£132,000	£74,233	£79,586	£5,354	£446
£650	£143,000	£77,852	£82,962	£5,110	£426
£700	£154,000	£82,797	£86,337	£3,540	£295
£750	£165,000	£87,845	£90,163	£2,318	£193
£800	£176,000	£92,892	£95,066	£2,174	£181

The gap does not grow in a straight line. It moves as each side crosses a tax threshold: the higher rate band, the Corporation Tax limits, and the loss of the Personal Allowance above £100,000.

What IR35 is and who decides

IR35 is the everyday name for the off-payroll working rules. They apply when a worker supplies services through their own intermediary, usually a personal service company, and would have been an employee if engaged directly. The rules are applied contract by contract.

Public sector clients. The client decides your status.
Medium and large clients outside the public sector. The client decides. It must give you a status determination statement with its reasons. If you disagree, the client has 45 days to respond.
Small clients outside the public sector. Your own company decides whether the rules apply. A client is medium or large if it meets two or more of these: turnover over £10.2 million, a balance sheet total over £5.1 million, more than 50 employees.

Company law raised the first two limits to £15 million and £7.5 million for financial years that begin on or after 6 April 2025. HMRC's manual says that for a client with a normal 12-month financial year, the earliest tax year this can change its size for these rules is 2027/28.

HMRC's Check Employment Status for Tax (CEST) tool gives HMRC's view of whether an engagement is inside the rules. Anyone can use it. HMRC says it will stand by the result as long as the information entered is accurate.

When the rules apply, the deemed employer deducts income tax and employee National Insurance from your fee, and pays employer National Insurance and, where it applies, the Apprenticeship Levy. It does not deduct student loan repayments. HMRC also says the rules are unlikely to apply if you are employed by an umbrella company. The umbrella is your employer and pays you through PAYE.

Every assumption in the model

The model is simple on purpose. Check each line against your own contract.

One contract for the whole year, paid for every day entered. No gaps and no second client.
No business expenses on either side.
No pension contributions on either side.
No VAT effects. Enter the day rate without VAT.
No other income, no student loan, and the standard Personal Allowance.
Outside: one director who owns all the shares and is the only employee, so the Employment Allowance cannot be claimed.
Outside: a 12-month accounting period, no associated companies and no other company income, so the Corporation Tax limits are £50,000 and £250,000 in full.
Outside: all profit after Corporation Tax is paid as dividends in the same tax year. Nothing is kept in the company.
Outside: no accountancy fees or insurance. These are real costs and they reduce the gap.
Inside: no umbrella company fee. Holiday pay is treated as part of gross pay.
Inside: the Apprenticeship Levy is charged at 0.5% of gross pay. Only employers with a pay bill over £3,000,000 pay it, so switch it off if yours does not pass it on.

The default salary of £12,570 equals the Personal Allowance and the employee National Insurance threshold, so the salary itself is free of both. The company pays £1,135.50 of employer National Insurance on it, but salary and employer National Insurance both reduce the profit that Corporation Tax is charged on. At £500 a day this model gives £69,932 with that salary and £69,179 with a £5,000 salary.

Who bears employer National Insurance inside IR35

This one setting moves the inside figure more than any other, so the calculator lets you choose.

It comes out of your rate. This is how an umbrella company works. The agency pays the umbrella the assignment rate. The umbrella deducts its employment costs, including employer National Insurance and the Apprenticeship Levy where it applies, and the remainder is your gross pay. At £500 a day that leaves £66,172 a year.
The fee-payer pays it on top. When the off-payroll rules apply to your own company, HMRC guidance says employer National Insurance is paid on top of the payment to your company and cannot be deducted from it. If your quoted rate is the full amount you are paid, choose this option. At £500 a day that gives £72,357 a year, and costs the fee-payer another £15,750.

Ask the agency or client which basis your rate is quoted on before you compare offers.

What the result leaves out

Time off. An umbrella employee gets holiday pay. A contractor outside IR35 is paid only for the days worked.
Timing. Outside IR35, you can leave profit in the company and take it in a later year. The model does not.
Scotland outside IR35. Dividends are taxed at the same rates across the UK, so choosing Scotland changes the inside figure, and the outside figure only when some of your salary is taxed.
Your real status. Nothing here tells you whether a contract is inside or outside the rules, and nothing here is a reason to arrange your work one way or the other.

Common mistakes

Comparing a rate with employer costs taken out against one without. An inside rate of £500 through an umbrella is not the same as £500 paid to your company.
Treating company income as your income. Outside IR35, Corporation Tax and dividend tax both apply before the money is yours.
Forgetting dividend tax is paid later. It is not deducted when the dividend is paid, so the money has to be kept back.
Assuming a small client means outside IR35. A small client only moves the decision to your company. The same status test applies.

Questions people ask

What is IR35?

IR35 is the common name for the off-payroll working rules. They apply when you work for a client through your own intermediary, usually a limited company, but would be an employee if you were engaged directly. The aim is that you pay broadly the same income tax and National Insurance as an employee.

What is the difference between inside and outside IR35?

Inside IR35 means the rules apply, so income tax and employee National Insurance are deducted from your fees as if you were an employee. Outside IR35 means they do not apply, so your company is paid in full and you decide how to take the money, usually as a small salary plus dividends.

How much more do I take home outside IR35?

On £500 a day for 220 days in 2026/27, this model gives £69,932 outside and £66,172 inside through an umbrella company, a gap of about £3,760 a year. The gap changes with the day rate and depends on every assumption listed on this page.

Who decides whether I am inside or outside IR35?

If your client is in the public sector, or is a medium or large organisation outside it, the client decides and must give you its reasons in a status determination statement. If the client is small and outside the public sector, your own company decides.

Who pays employer National Insurance inside IR35?

Under the off-payroll rules the deemed employer pays employer National Insurance on top of your fee and cannot deduct it from you. If you work through an umbrella company instead, employer National Insurance at 15% comes out of the assignment rate before your gross pay is worked out.

Can I claim expenses inside IR35?

This calculator assumes no expenses on either side. Inside IR35, the deemed employer takes off only the cost of materials and expenses that an employee could deduct from taxable earnings, before working out tax.

What director's salary does the outside IR35 figure assume?

£12,570 unless you change it. That equals the Personal Allowance, so the salary itself carries no income tax or employee National Insurance. On £500 a day this model gives about £753 more with that salary than with £5,000. That is a result of the model, not a recommendation. The right salary depends on your other income and your company.

Does HMRC have an IR35 status tool?

Yes. It is called Check Employment Status for Tax, or CEST. Clients, workers and agencies can use it, it is anonymous, and HMRC says it will stand by the result if the information you give is accurate.

Sources

Figures last checked against these sources on 10 October 2026. This page gives general information and estimates, not tax, legal or financial advice.