Compare contractor take-home pay operating inside vs outside IR35. Enter your day rate to see the tax difference between the limited company salary + dividends model and PAYE deemed salary. Updated for 2026/27.
Annual revenue
£110,000
£500/day × 220 days
Calculator assumptions
Outside IR35
£68,515
per year
Inside IR35
£66,414
per year
Outside IR35 pays
£2,101 more
(1.9% of revenue)
Email me my results
Get inside vs outside IR35 comparison — plus the 5-year cost of getting it wrong at £500/day — emailed instantly.
For accountants & bookkeepers
Your clients are asking this question every week.
Put this calculator on your site — they get the answer themselves, you get notified the moment they're ready to act.
See how the widget worksIR35 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 table shows annual take-home pay at four common day rates, assuming 220 billable days and £3,000 of business expenses. Outside IR35 assumes a salary at the personal allowance and all remaining profit paid as dividends.
| Day rate | Annual revenue | Outside IR35 take-home | Inside IR35 take-home | Difference |
|---|---|---|---|---|
| £400 | £88,000 | £58,126 | £55,318 | £2,808 more outside |
| £600 | £132,000 | £78,666 | £74,423 | £4,243 more outside |
| £800 | £176,000 | £93,729 | £93,245 | £484 more outside |
| £1,000 | £220,000 | £113,343 | £113,523 | £180 more inside |
The gap is smaller than the old "20–30% less inside IR35" rule of thumb. Two things changed it: dividend tax rose to 10.75%, 35.75% and 39.35% in April 2026, and a company with profits above £50,000 pays more than the 19% small profits rate of corporation tax. At the highest day rates, taking every pound of profit as dividends can leave you no better off than PAYE.
| Inside IR35 | Outside IR35 | |
|---|---|---|
| How you are taxed | PAYE on a deemed salary, like an employee | Corporation tax on profit, then dividend tax on what you take out |
| Employer NI (15%) | Due on the deemed salary, and usually funded out of your rate | Only on the small salary you pay yourself |
| Employee NI | 8% then 2% on the deemed salary | None on dividends |
| Business expenses | Not deductible | Deductible before corporation tax |
| When you pay tax | Every payday, deducted before you are paid | Corporation tax after the year end; dividend tax through Self Assessment |
| Leaving money in the company | Not possible: it is all taxed as pay | Possible, which defers the dividend tax |
| Who decides status | The client, unless it is a small company, in which case your own company decides | |
If a role moves inside IR35, the day rate needed to keep the same take-home depends on where your income sits in the tax bands, so there is no single percentage that works for everyone. Enter the inside rate you are being offered in the calculator above and compare its Inside IR35 take-home with the Outside IR35 figure for your current rate.
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.
If you engage contractors, the off-payroll working rules may require you to:
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.
See your take-home pay after income tax, National Insurance, pension and student loan. Full Scottish rates and the £100k tax trap — plus what you cost your employer.
Work out combined take-home across two jobs with the right tax code on each. Per-job National Insurance, a second-job BR-code check, and whether you owe tax or are due a refund.
Work backwards from take-home to the gross salary you need — and what it costs the employer. Enter a target net figure and see the required gross.