IR35 calculator
Compare what you take home from a day rate inside IR35 and outside it.
2026 to 2027 rates from HMRC and GOV.UK, checked 14 November 2026.
Result
On £500.00 a day, you would take home about £67,693.07 a year inside IR35 through an umbrella company, and £72,293.19 outside IR35 through your own limited company: £4,600.12 more outside.
more a year outside IR35
| Inside: a month | £5,641.09 |
|---|---|
| Outside: a month | £6,024.43 |
| Outside: Corporation Tax | £23,093.04 |
| Outside: tax on dividends | £18,478.27 |
Inside IR35
Show the workings
| Step | Sum | Answer |
|---|---|---|
| Left after the umbrella company's fee | £115,000.00 − £1,150.00 | £113,850.00 |
| Your gross pay: the most the rest covers, with employer costs on top | £98,503.56 + £14,025.53 employer NI + £1,320.90 employer pension = £113,849.99 | £98,503.56 |
| Employer National Insurance | £93,503.56 above £5,000.00 × 15% | £14,025.53 |
| Qualifying earnings | £98,503.56 between £6,240.00 and £50,270.00 | £44,030.00 |
| Employer pension | £44,030.00 × 3% | £1,320.90 |
| Tax-free pay from tax code 1257L | £12,570.00 allowance, which code 1257L covers up to £12,579.00 | £12,579.00 |
| Taxable pay | £98,503.56 − £12,579.00 | £85,924.56 |
| Basic rate | £37,700.00 × 20% | £7,540.00 |
| Higher rate | £48,224.56 × 40% | £19,289.82 |
| Income Tax | £7,540.00 + £19,289.82 | £26,829.82 |
| National Insurance | £37,700.00 × 8% + £48,233.56 × 2% | £3,980.67 |
| Take-home pay | £98,503.56 − £26,829.82 tax − £3,980.67 National Insurance | £67,693.07 |
What this leaves out or assumes
- Umbrella companies set their own fees, and some do not pass on the Apprenticeship Levy: check your umbrella company's payslip illustration.
- Holiday pay is part of your gross pay here, as umbrella companies often roll it up into each payslip.
- England, Wales and Northern Ireland Income Tax rates, a standard Personal Allowance and National Insurance category A.
- Tax-free pay follows the tax code, as payroll and HMRC's own take-home pay estimator do: code 1257L gives £12,579 a year, not £12,570, which is up to a few pounds less tax.
- Worked out over the whole tax year. Payroll works out each payday on its own, so a monthly or weekly payslip can differ by a few pence, or by more in a month with a bonus.
Where the figures come from
- Employer National Insurance secondary threshold: £5,000 a year. Source: HMRC: Rates and thresholds for employers 2026 to 2027. Checked 13 November 2026.
- Employer National Insurance above the secondary threshold (category A): 15%. Source: HMRC: Rates and thresholds for employers 2026 to 2027. Checked 13 November 2026.
- Employment Allowance: £10,500 a year. Source: HMRC: Rates and thresholds for employers 2026 to 2027. Checked 13 November 2026.
- Lower limit of qualifying earnings for automatic enrolment pensions: £6,240 a year. Source: GOV.UK: Workplace pensions, what you, your employer and the government pay. Checked 13 November 2026.
- Upper limit of qualifying earnings for automatic enrolment pensions: £50,270 a year. Source: GOV.UK: Workplace pensions, what you, your employer and the government pay. Checked 13 November 2026.
- Personal Allowance, 2026 to 2027: £12,570 a year. Source: HMRC: Rates and thresholds for employers 2026 to 2027. Checked 13 November 2026.
- Range of allowances each tax code number covers: £10. Source: HMRC PAYE Manual PAYE11065: suffix codes, calculating the number. Checked 13 November 2026.
- Basic rate of Income Tax (England, Wales and Northern Ireland): 20%. Source: HMRC: Rates and thresholds for employers 2026 to 2027. Checked 13 November 2026.
- Basic rate band: taxable income it covers (England, Wales and Northern Ireland): £37,700 a year. Source: HMRC: Rates and thresholds for employers 2026 to 2027. Checked 13 November 2026.
- Higher rate of Income Tax (England, Wales and Northern Ireland): 40%. Source: HMRC: Rates and thresholds for employers 2026 to 2027. Checked 13 November 2026.
- Taxable income above which the additional rate applies (England, Wales and Northern Ireland): £125,140 a year. Source: HMRC: Rates and thresholds for employers 2026 to 2027. Checked 13 November 2026.
- Additional rate of Income Tax (England, Wales and Northern Ireland): 45%. Source: HMRC: Rates and thresholds for employers 2026 to 2027. Checked 13 November 2026.
- National Insurance primary threshold: £12,570 a year. Source: HMRC: Rates and thresholds for employers 2026 to 2027. Checked 13 November 2026.
- National Insurance upper earnings limit: £50,270 a year. Source: HMRC: Rates and thresholds for employers 2026 to 2027. Checked 13 November 2026.
- Employee National Insurance between the primary threshold and upper earnings limit (category A): 8%. Source: HMRC: Rates and thresholds for employers 2026 to 2027. Checked 13 November 2026.
- Employee National Insurance above the upper earnings limit (category A): 2%. Source: HMRC: Rates and thresholds for employers 2026 to 2027. Checked 13 November 2026.
Outside IR35
Show the workings
| Step | Sum | Answer |
|---|---|---|
| Employer National Insurance on your salary | £7,570.00 above £5,000.00 × 15% | £1,135.50 |
| Company profit | £115,000.00 − £0.00 costs − £12,570.00 salary − £1,135.50 employer NI | £101,294.50 |
| Corporation Tax | £101,294.50 × 25% − marginal relief of 3/200 × (£250,000.00 − £101,294.50) | £23,093.04 |
| Paid out to you as dividends | £101,294.50 − £23,093.04 | £78,201.46 |
| Personal Allowance | £12,570.00 | £12,570.00 |
| Dividends in the dividend allowance | £500.00 × 0% | £0.00 |
| Dividends in the basic band | £37,200.00 × 10.75% | £3,999.00 |
| Dividends in the higher band | £40,501.46 × 35.75% | £14,479.27 |
| Your National Insurance on the salary | as through payroll | £0.00 |
| Take-home | £12,570.00 + £78,201.46 − £0.00 − £18,478.27 − £0.00 | £72,293.19 |
What this leaves out or assumes
- A company with one director, no other companies and a 12-month year, paying out all its profit after Corporation Tax as dividends in the same tax year. Profit kept in the company is not taxed as dividends until it is paid out.
- No Employment Allowance: a company whose only employee paid above the secondary threshold is its director cannot claim it.
- Income Tax at the rates for England, Wales and Northern Ireland. Leaves out pension contributions, student loans and any other income.
Where the figures come from
- Employer National Insurance secondary threshold: £5,000 a year. Source: HMRC: Rates and thresholds for employers 2026 to 2027. Checked 13 November 2026.
- Employer National Insurance above the secondary threshold (category A): 15%. Source: HMRC: Rates and thresholds for employers 2026 to 2027. Checked 13 November 2026.
- Corporation Tax small profits rate: 19%. Source: HMRC: Rates and allowances, Corporation Tax. Checked 14 November 2026.
- Corporation Tax main rate: 25%. Source: HMRC: Rates and allowances, Corporation Tax. Checked 14 November 2026.
- Corporation Tax marginal relief lower limit: £50,000 a year. Source: HMRC: Rates and allowances, Corporation Tax. Checked 14 November 2026.
- Corporation Tax marginal relief upper limit: £250,000 a year. Source: HMRC: Rates and allowances, Corporation Tax. Checked 14 November 2026.
- Corporation Tax standard marginal relief fraction (3/200): 1.5%. Source: HMRC: Rates and allowances, Corporation Tax. Checked 14 November 2026.
- Dividend allowance: £500 a year. Source: GOV.UK: Tax on dividends. Checked 14 November 2026.
- Dividend tax, basic rate: 10.75%. Source: GOV.UK: Tax on dividends. Checked 14 November 2026.
- Dividend tax, higher rate: 35.75%. Source: GOV.UK: Tax on dividends. Checked 14 November 2026.
- Dividend tax, additional rate: 39.35%. Source: GOV.UK: Tax on dividends. Checked 14 November 2026.
- Personal Allowance, 2026 to 2027: £12,570 a year. Source: HMRC: Rates and thresholds for employers 2026 to 2027. Checked 13 November 2026.
- Basic rate of Income Tax (England, Wales and Northern Ireland): 20%. Source: HMRC: Rates and thresholds for employers 2026 to 2027. Checked 13 November 2026.
- Higher rate of Income Tax (England, Wales and Northern Ireland): 40%. Source: HMRC: Rates and thresholds for employers 2026 to 2027. Checked 13 November 2026.
- Additional rate of Income Tax (England, Wales and Northern Ireland): 45%. Source: HMRC: Rates and thresholds for employers 2026 to 2027. Checked 13 November 2026.
What IR35 means
IR35, the off-payroll working rules, decides whether a contractor working through their own company should pay tax like an employee. Inside IR35, you are taxed much as an employee is, through a payroll such as an umbrella company's. Outside IR35, your company can pay you a salary and dividends from its profit after Corporation Tax. In most cases the client is responsible for deciding your status, though the rules differ for small private-sector clients. GOV.UK explains the rules, and HMRC's employment status tool helps check them.
How the two sums work
Inside: the umbrella company takes its fee and the employer's National Insurance and pension from the money for your work; the rest is salary, taxed through PAYE. The umbrella company calculator shows it in detail.
Outside: your company pays your salary and employer National Insurance, then Corporation Tax on its profit: 19% up to £50,000, 25% above £250,000, with marginal relief between. The rest is paid to you as dividends. You pay no tax on the first £500 of dividends, then 10.75%, 35.75% or 39.35% depending on your tax band.
The comparison leaves out pension contributions and expenses you could claim, and assumes all profit is paid out each year. It gives information, not advice: an accountant can work out the right set-up for you.