£Finance
IR35 Take-Home Pay Calculator (2025/26)
IR35 (off-payroll working rules) can dramatically affect contractor take-home pay. If your contract is caught by IR35, you are treated as a deemed employee — meaning you pay full PAYE tax and employee National Insurance, but without employment benefits. This calculator helps UK contractors understand the financial difference between working inside and outside IR35, based on your day rate and the number of working days per year.
220 days = typical with 5wk holiday + gaps
Enter your day rate to compare inside vs outside IR35 take-home pay
2025/26 tax year. Outside IR35: 25% corp tax, optimal dividend split. Inside IR35: full PAYE + NI. Estimates only.
Frequently Asked Questions
What is IR35?
IR35 (officially the off-payroll working rules) is HMRC legislation designed to ensure contractors who work like employees pay similar tax. If a contract is "inside IR35," the contractor is treated as a deemed employee for tax purposes.
How much less do I earn inside IR35?
Typically, contractors inside IR35 take home 15–25% less than those outside IR35 on the same day rate, because they pay full PAYE income tax and employee NI without the tax efficiency of dividends or the ability to claim business expenses.
Who decides if I am inside or outside IR35?
Since April 2021, for medium and large private sector clients, the end client determines IR35 status (via a Status Determination Statement). For small companies, the contractor's PSC makes the determination. HMRC's CEST tool can help assess status.
Can I work inside IR35 through an umbrella company?
Yes. Umbrella companies are commonly used for inside-IR35 contracts. The umbrella employs you directly, handling PAYE and NI. Your margin may be slightly lower due to umbrella fees (typically £15–£30/week).
What expenses can I claim outside IR35?
Outside IR35, contractors can claim legitimate business expenses through their limited company, including some travel, professional subscriptions, home office costs, and equipment — reducing their taxable profit before salary and dividends.
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