IR35 Calculator — Inside vs Outside IR35
IR35 determines whether HMRC treats your contractor income as employment (inside IR35) or as a genuine business (outside IR35). Being inside IR35 means you pay full PAYE tax. Outside IR35 allows a more tax-efficient salary/dividend structure through your limited company.
What is IR35?
Your client treats you as a disguised employee. Your limited company invoices are subject to PAYE — you pay full Income Tax and National Insurance just like an employee, but without employment rights.
You operate as a genuine business. You can take an NI-efficient salary (typically £12,570) and draw the remainder as dividends, which are taxed at lower dividend rates — significantly boosting take-home pay.
IR35 applies to contractors working through limited companies (personal service companies). Since April 2021, medium and large private sector clients determine IR35 status for each engagement.
HMRC assesses substitution (can someone else do the work?), control (does the client direct how?), and mutuality of obligation. HMRC's CEST tool can help determine status.
Inside vs outside IR35 — all day rates 2025-26
| Day rate | Annual revenue | Inside IR35 net | Outside IR35 net | Annual saving | |
|---|---|---|---|---|---|
| £150/day | £39,000 | £31,600 | £29,868 | £-1,732 | View → |
| £175/day | £45,500 | £36,280 | £34,432 | £-1,848 | View → |
| £200/day | £52,000 | £40,717 | £38,996 | £-1,721 | View → |
| £225/day | £58,500 | £44,487 | £43,560 | £-927 | View → |
| £250/day | £65,000 | £48,257 | £47,946 | £-311 | View → |
| £275/day | £71,500 | £52,027 | £49,104 | £-2,923 | View → |
| £300/day | £78,000 | £55,797 | £52,172 | £-3,625 | View → |
| £325/day | £84,500 | £59,567 | £55,240 | £-4,327 | View → |
| £350/day | £91,000 | £63,337 | £58,308 | £-5,029 | View → |
| £375/day | £97,500 | £67,107 | £61,376 | £-5,731 | View → |
| £400/day | £104,000 | £70,077 | £64,444 | £-5,633 | View → |
| £425/day | £110,500 | £72,547 | £67,513 | £-5,034 | View → |
| £450/day | £117,000 | £74,999 | £70,581 | £-4,418 | View → |
| £475/day | £123,500 | £76,981 | £73,649 | £-3,332 | View → |
| £500/day | £130,000 | £80,057 | £76,717 | £-3,340 | View → |
| £525/day | £136,500 | £83,502 | £79,786 | £-3,716 | View → |
| £550/day | £143,000 | £86,947 | £82,854 | £-4,093 | View → |
| £575/day | £149,500 | £90,392 | £85,922 | £-4,470 | View → |
| £600/day | £156,000 | £93,837 | £88,990 | £-4,847 | View → |
| £625/day | £162,500 | £97,282 | £92,059 | £-5,223 | View → |
| £650/day | £169,000 | £100,727 | £95,127 | £-5,600 | View → |
| £675/day | £175,500 | £104,172 | £98,195 | £-5,977 | View → |
| £700/day | £182,000 | £107,617 | £101,263 | £-6,354 | View → |
| £725/day | £188,500 | £111,062 | £104,332 | £-6,730 | View → |
| £750/day | £195,000 | £114,507 | £107,400 | £-7,107 | View → |
| £775/day | £201,500 | £117,952 | £110,468 | £-7,484 | View → |
| £800/day | £208,000 | £121,397 | £113,536 | £-7,861 | View → |
| £825/day | £214,500 | £124,842 | £116,604 | £-8,238 | View → |
| £875/day | £227,500 | £131,732 | £122,741 | £-8,991 | View → |
| £900/day | £234,000 | £135,177 | £125,809 | £-9,368 | View → |
| £925/day | £240,500 | £138,622 | £128,877 | £-9,745 | View → |
| £975/day | £253,500 | £145,512 | £135,013 | £-10,499 | View → |
| £1,000/day | £260,000 | £148,957 | £138,081 | £-10,876 | View → |
| £1,050/day | £273,000 | £155,847 | £144,218 | £-11,629 | View → |
| £1,100/day | £286,000 | £162,737 | £150,354 | £-12,383 | View → |
| £1,150/day | £299,000 | £169,627 | £156,491 | £-13,136 | View → |
| £1,200/day | £312,000 | £176,517 | £162,627 | £-13,890 | View → |
| £1,250/day | £325,000 | £183,407 | £168,764 | £-14,643 | View → |
| £1,350/day | £351,000 | £197,187 | £181,037 | £-16,150 | View → |
| £1,500/day | £390,000 | £217,857 | £199,445 | £-18,412 | View → |
Outside IR35 figures assume: £12,570 salary, 5% allowable expenses, 19%/25% corporation tax, 8.75%/33.75% dividend tax. Estimates only — consult an accountant for your specific situation.
Up to £550/day
£600/day and above
IR35 and your take-home pay in 2025-26
The financial impact of IR35 is significant. A contractor on £500/day earns £130,000 in annual revenue. Inside IR35, after full PAYE tax and NI, the take-home is approximately £80,057. Outside IR35, using an optimal salary/dividend structure, take-home rises to approximately £76,717 — a saving of £-3,340 per year.
The outside IR35 advantage comes from corporation tax on company profits (19–25%), then drawing dividends taxed at 8.75% (basic rate) or 33.75% (higher rate) — lower than income tax rates of 20%/40%. You also avoid employee NI (8%) on the dividend portion. See the umbrella vs limited company comparison for a full breakdown.
Important: IR35 status must be determined correctly. Incorrectly claiming to be outside IR35 can result in large HMRC back-tax bills. Always consult a specialist accountant or use HMRC's CEST tool for your specific engagement.