IR35 Calculator: work out your take-home pay inside or outside IR35

How to use the IR35 calculator

1. Enter your day rate or annual contract value. Type in the gross amount your client pays you, before tax or deductions.
2. Select your IR35 status. Switch between inside IR35 and outside IR35 to see how each status affects your take-home pay.
3. Choose your working structure. Inside IR35: pick an umbrella company or a limited company. Outside IR35: the calculator defaults to a limited company.
4. Add optional details. Enter your pension contribution (salary sacrifice), student loan plan, and actual working days per year.
5. Read your results. The calculator shows your take-home pay, income tax, employee NI, employer NI, and effective tax rate — broken down monthly and annually.
6. Compare both scenarios. Toggle between inside and outside IR35 to see the take-home difference at your rate. Useful when weighing up two contract offers.

Why IR35 calculators give different results

Tried a few IR35 calculators and got different numbers from each? That is normal. The tax rates are the same everywhere. The differences come from the assumptions each tool makes.

Working days are the biggest one. Some tools assume 260 days a year. Most contractors actually work 220 to 234 days once you account for bank holidays, gaps between contracts, and sick days. That gap can push gross income up by 10 to 15 per cent, which is why one calculator can look so different from another on the same day rate.

Other variables include the apprenticeship levy (umbrella companies pass this on to inside IR35 workers), how pension salary sacrifice is treated, and whether the tool accounts for the 60 per cent effective tax rate between £100,000 and £125,140.

Our calculator is clear about its assumptions. To understand the three tests that determine your IR35 status in the first place, HMRC's Check Employment Status for Tax tool is the official starting point, though it has known gaps around mutuality of obligation, which we cover below.

What does inside IR35 mean?

Inside IR35 means HMRC treats you as an employee of the client you are working for, even without a formal employment contract. The legislation came in during 2000 to tackle disguised employment — where a contractor runs through a limited company but works in a way that looks just like a permanent employee.

When you are inside IR35, your earnings count as deemed salary. Income tax and National Insurance come out through PAYE. You also pick up the employer's National Insurance bill, which comes out of your contract rate before you see a penny. This is why inside IR35 take-home sits at roughly 45 to 55 per cent of your gross contract value, well below the 70 per cent or more you can reach outside IR35 at the same rate.

Being inside IR35 is not the end of the world. For short contracts, roles that are hard to defend as outside IR35, or contractors who want less admin, it can make sense. But you need to know the numbers before you sign.

Inside IR35 and umbrella companies

Most inside IR35 contractors use an umbrella company to handle PAYE. The umbrella takes you on as an employee, collects your contract income from the agency or client, deducts the employer's NI, the apprenticeship levy and its own fee, then pays you through standard payroll.

What does outside IR35 mean?

Outside IR35 means your contract has been assessed and the working relationship counts as genuine self-employment. You are providing a service through your limited company, not acting as a disguised employee. HMRC does not require PAYE.

Outside IR35 contractors usually pay themselves a low salary around the National Insurance threshold and take the rest as dividends from their limited company. Dividends carry a lower tax rate than employment income, and the company pays corporation tax rather than full PAYE rates. That is why outside IR35 produces noticeably higher take-home at the same contract rate.

You can also run legitimate business expenses through the company account, such as accountancy fees, subscriptions, equipment and travel to non-regular sites. These cut your corporation tax bill and keep more money in your pocket.

Outside IR35 does mean more admin. You need a limited company and an accountant. Your contract wording and actual working practices must line up; otherwise your status becomes hard to defend. Our guide to what an outside IR35 contract needs to contain covers what to look for.

Outside IR35 and limited companies

A limited company is the structure that makes outside IR35 work. You own the company, the company holds the contract, and the company pays you. You are the director and, in most cases, the only employee.

Since the 2021 off-payroll reform, the end client determines your IR35 status for medium and large businesses, not you. Small companies are exempt. A client is small if it meets two of these three: under 50 employees, turnover under £10.2 million, or a balance sheet under £5.1 million. If your client qualifies, you still make your own determination.

Inside vs outside IR35: side-by-side comparison

Here is a direct comparison. The financial difference is real. At a £500 day rate, the annual take-home gap between inside and outside IR35 can top £20,000.

Difference between inside and outside IR35 for contractors.

How is IR35 status decided?

IR35 status is a legal judgment. No calculator, including this one, can give you a definitive answer. What the calculator can do is show you the financial impact of each scenario, so you know what is at stake.

Status comes down to the actual working relationship between you and the end client. Three tests carry the most weight.

The three IR35 tests

Three tests used to determine IR35 status.

Other factors matter too: financial risk (do you carry the cost if work goes wrong?), integration (how embedded are you in the client's organisation?), and whether you use your own equipment or the client's.

HMRC's CEST tool covers most of these factors and gives a provisional result. It is not always legally binding, and it skips mutuality of obligation. For a more thorough assessment, the IR35 checker walks through the full checklist and explains what to do next.

What contractors are actually getting inside IR35

Contractors comparing real-world take-home figures is a constant topic. A thread started by a contractor weighing up roles at £450–£500 per day inside IR35 drew candid responses from people at a range of day rates.

The answer that kept coming up: inside IR35 gives you roughly half your gross contract value as take-home. The top comment put it plainly — you are PAYE, and the umbrella fee is the only real variable between providers.

The more useful part of the thread was the breakdown of why calculators diverge. Tax rates are not the issue; those are fixed. It is the assumptions. Working days are the main one. Most calculators set 260 days. Contractors who track their actual time tend to land at 220 to 234, once holidays, gaps and bank holidays are counted. That gap inflates gross income by 10 to 15 per cent in most tools.

On the numbers: at £700 per day inside IR35, contractors reported £1,450 to £1,950 per week take-home. At £750 per day, figures of £6,000 to £7,500 per month came up. The variance was almost entirely down to salary sacrifice and tax code differences.

When comparing inside and outside offers, the 20 per cent uplift rule kept surfacing. At £500 per day outside IR35, you need around £600 inside to land in a similar net position once pension, expenses and tax efficiency are factored in.

Inside vs outside IR35: what the numbers actually look like

The financial gap between inside and outside IR35 is bigger than most contractors expect. A few key things get missed when people run the numbers for the first time.

Inside IR35 means your full earnings are taxed as employment income. You pay income tax and National Insurance on everything. Auto-enrolment pension contributions also typically apply — five per cent from you and three per cent from the umbrella. Those are not optional once you earn above the threshold.

Outside IR35, you work through a limited company. You draw a low salary, usually around £12,570, to use up the personal allowance and take the rest as dividends. The basic rate dividend tax is 8.75 per cent; at the higher rate it is 33.75 per cent. Compare that to 40 per cent income tax on employment income in the same bracket. The company pays corporation tax too, but the combined rate still beats PAYE for most contractors.

Dividend tax rates have gone up in recent years, so the gap between inside and outside IR35 is narrower than it was. But outside IR35 still typically returns 15 to 25 per cent more take-home at the same day rate. To match £500 per day outside IR35, an inside contract needs to offer around £600. That is before you factor in expenses, which outside IR35 contractors can claim through the company and inside IR35 contractors mostly cannot.

Final thoughts: use the calculator as a starting point

This calculator gives you a fast, clear comparison between inside and outside IR35 take-home pay. Use it before you accept a contract, when you are benchmarking a rate, or when you want to understand the financial stakes before getting a proper IR35 assessment.

It cannot tell you your IR35 status. That is a legal call based on your contract and how you actually work day to day. If you are not sure of your status, or you want to challenge a determination your client has issued, start with HMRC's CEST tool and consider an independent review if the contract value makes it worthwhile.

To go deeper on the legislation, the IR35 rules explained covers the full history, the 2017 and 2021 reforms, and what compliance looks like in practice.