IR35 Calculator
Updated November 2026 · Free · No sign-up
Compare inside vs outside IR35 take-home — the same day rate through umbrella/PAYE versus your own limited company with salary + dividends, so the contract decision gets numbers instead of forum folklore.
Quick answer: On a £500/day contract, outside IR35 (limited company) typically nets 10-18% more than inside IR35 (umbrella/PAYE) — roughly £8-15k/year on mid rates — in exchange for admin, insurance, and status risk. The gap narrows as corporation tax and dividend rates rise.
What IR35 Status Changes
| Inside IR35 | Outside IR35 | |
|---|---|---|
| How you're paid | Umbrella/agency PAYE — full income tax + both NIs from the rate (umbrella math) | Your ltd company invoices; you take small salary + dividends |
| Who decides | Medium/large clients decide status (SDS); small-company clients → you decide and carry the risk | |
| Typical net | ~50-58% of rate | ~60-68% of rate |
| Extras | Employment rights-ish (holiday pay, pension) | Expenses, VAT flat-rate margin, pension via company (huge allowance), income timing |
| Risk | None on status | HMRC reclassification: back taxes + interest + penalties |
Worked Example — £500/day, 46 weeks (£115,000)
Inside (umbrella): after employer NI, levy, margin, PAYE, employee NI ≈ £66-68k net.
Outside (ltd): £115k revenue − £3.5k expenses − ~£9k salary → profits ~£102.5k − corporation tax (19-25% marginal bands) ≈ £22k → dividends from the rest, taxed 8.75/33.75% → total personal net + salary ≈ £74-78k, more if income splits with a shareholding spouse or profits park in company pension.
The gap: ~£8-11k/year — meaningful, no longer the 30% chasm of the pre-2017 era. Pension contributions through the company (gross, corporation-tax-deductible) are the single biggest remaining lever.
What Actually Determines Status
- Substitution: a genuine right to send a qualified substitute is the strongest outside pointer.
- Control: who decides how/when/where work is done — deliverables vs supervised hours.
- Mutuality of obligation: project-based engagement vs continuous expectation of work.
- Part-and-parcel signs that hurt: line-managing staff, internal titles, long single-client tenures, badge-and-desk integration.
- HMRC's CEST tool gives a determination (keep the PDF); contract AND working practices both count.
Decision Framework
Take inside roles when: the rate compensates (ask for +15-20% vs outside equivalents), you want zero admin/risk, or the pipeline is thin. Hold out for outside when: you run multiple clients, genuine project deliverables, and can evidence substitution/control — and price the £2-4k of accountancy, insurances (PI/PL), and your time into the comparison honestly. Rate conversions against permanent roles: day rate × weeks × ~0.62 ≈ comparable salary + benefits (the same logic as the US W-2 vs 1099 math).
Compliance Notes
Since 2021, medium/large private-sector clients issue the Status Determination Statement and carry liability for getting it wrong — which is why blanket "everyone inside" policies exist. Disagree? Use the client-led dispute process (31-day response duty). Working outside: keep contracts, CEST output, substitution clauses exercised if possible, multiple-client evidence, and insurance — the file you build today is the defense in a 2029 enquiry.
Frequently Asked Questions
What is the take-home difference inside vs outside IR35?
Typically 10-18% of the contract value — roughly £8-15k/year on £400-600 day rates — before valuing outside's pension and income-timing flexibility.
Who decides my IR35 status?
Medium/large clients issue a Status Determination Statement and carry the liability; for small-company clients, your PSC self-determines and carries the risk.
What makes a contract outside IR35?
Genuine substitution rights, control over how/when work is done, project-based engagement without mutual obligation, and working practices matching the contract.
Is an umbrella the same as inside IR35?
Financially near-identical — both route the rate through PAYE. Umbrella adds its margin but handles everything; inside-via-PSC adds admin for no gain.
What is the biggest outside-IR35 tax lever?
Company pension contributions — paid gross, corporation-tax deductible, outside both NI nets — far ahead of the dividend/salary mix tweaks.
What happens if HMRC reclassifies me?
Back income tax and NICs (potentially years), interest, and penalties — the reason status evidence files and insurance exist. Deemed-payment settlements routinely reach six figures.
✓ Formula verified • Last updated: November 3, 2026