£725 day rate inside and outside IR35 (2026-27)
Over 220 days, £725 a day is £159,500 of fees. Inside IR35 you keep £96,321; outside IR35, paid as a £12,570 salary plus dividends, you keep £88,025. That is £8,296 a year more inside IR35, because the company bears employer NI and Corporation Tax while the deemed employer pays employer NI on top of an inside fee.
| Annual fees (220 days) | £159,500 |
| Inside IR35: Income Tax + employee NI | £63,179 |
| Inside IR35: take-home | £96,321 |
| Outside: employer NI on £12,570 salary | £1,136 |
| Outside: Corporation Tax | £34,885 |
| Outside: dividends paid | £110,909 |
| Outside: Income Tax + dividend tax | £35,454 |
| Outside IR35: take-home | £88,025 |
| Difference per year | £8,296 more inside IR35 |
How this is worked out
Inside IR35 the deemed employer deducts Income Tax and employee NI from your fees and pays employer NI itself. This page treats the full fee as salary, taxed at 2026-27 rates in England, so the employer NI paid by the deemed employer is not taken from it.
Outside IR35 the company pays you a £12,570 salary (no employee NI, £1,136 of employer NI at 15% above £5,000; a sole director who is the only employee cannot claim Employment Allowance). Corporation Tax is 19% up to £50,000 of profit and 25% above £250,000, with Marginal Relief between. All remaining profit is paid as dividends.
Dividends are taxed at 10.75%, 35.75% or 39.35% after the £500 allowance, and the Personal Allowance falls to £831 because total income passes £100,000. Assumptions: 220 billable days, no business expenses, accountancy fees or pension, no other income.
Sources: Understanding off-payroll working (IR35) (GOV.UK), Income Tax rates and allowances (GOV.UK), Rates and thresholds for employers 2026 to 2027 (GOV.UK), Employment Allowance: check if you are eligible (GOV.UK), Corporation Tax rates and allowances (GOV.UK), Tax on dividends (GOV.UK)