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

IR35 and Off-Payroll Working: A Contractor's Guide

IR35 is one of the most significant tax issues facing UK contractors. Understanding how it affects your take-home pay helps you make informed decisions about contract engagements and whether a day rate adequately compensates for the inside-IR35 tax hit.

The Day Rate Equivalent Inside IR35

If you are forced inside IR35, you effectively need a higher day rate to maintain the same take-home pay. The rule of thumb is that an inside-IR35 day rate needs to be approximately 20–30% higher than an outside-IR35 rate to achieve the same net income. Use the calculator above to find the exact figure for your circumstances.

Key Factors HMRC Uses to Determine IR35 Status

• Substitution: Can you send a substitute to do the work? A genuine right of substitution (not merely theoretical) points outside IR35.
• Control: Does the client dictate where, when, and how you work? High client control points inside IR35.
• Mutuality of Obligation: Is there an obligation to offer and accept work? If the client must give you work and you must take it, this points inside IR35.
• Financial Risk: Do you invest in your business, risk not being paid, or bear cost overruns? Genuine financial risk points outside.
• Integration: Are you treated like an employee — on the org chart, invited to staff events, using company IT? This points inside.

Using HMRC's CEST Tool

HMRC's Check Employment Status for Tax (CEST) tool gives an indication of status. If you answer accurately and CEST returns an "outside IR35" result, HMRC will generally stand by it. However, CEST does not cover all scenarios and does not always reach a conclusion — professional advice is recommended for complex situations.

Employer Perspective: IR35 and Off-Payroll Compliance

If you engage contractors, the off-payroll working rules may require you to:

• Issue a Status Determination Statement (SDS) for each contractor engagement
• Operate PAYE on payments if the determination is inside IR35
• Maintain records of your status determinations

Use our Employer NI Calculator to understand the additional NI cost of treating a contractor as inside IR35, and our Employee Cost Calculator for the full cost of employment.