IR35 Inside vs Outside Take-Home 2027 Calculator UK
Compare your contractor take-home pay Inside vs Outside IR35 for 2026/27. Includes Corporation Tax, dividends, salary, and Employer NIC.
| Gross billings (day rate × days) | — |
| Inside IR35 — Employer NIC 15% | — |
| Inside IR35 — Employee tax + NI | — |
| Outside — Corp Tax (19%-25%) | — |
| Outside — Dividend Tax | — |
| Outside — Salary tax + NI | — |
What Is IR35 in 2026/27?
IR35 (the off-payroll working rules) checks whether a contractor working via their own limited company is genuinely self-employed (Outside IR35) or a disguised employee (Inside IR35). Since April 2021 in the private sector, the end-client decides the status and the fee-payer (usually the agency) deducts PAYE income tax and Employee NI before paying the personal service company. From April 2025, Employer NIC rose to 15% with the threshold dropping to £5,000 — significantly raising the Inside-IR35 cost gap.
How the Take-Home Differs
Inside IR35: ~70% of gross becomes deemed employment income, taxed through PAYE. The contractor typically nets 55-62% of the day-rate billings depending on tax band. Outside IR35: contractor takes a low director salary (£12,570 to use PA), pays Corporation Tax (19-25%) on profits, then takes the balance as dividends taxed at 8.75%/33.75%/39.35%. Typical net 70-78% of day-rate billings.
How to Maximise Outside-IR35 Take-Home
Pay yourself an optimal salary (£12,570 for sole director, or £9,100 if you have no Employment Allowance to avoid Employer NIC). Take the rest as dividends. Make Employer pension contributions into a SIPP — they reduce CT and avoid all income tax until drawdown. Use Director's Loan Account responsibly. Always check status: an HMRC enquiry can retrospectively reclassify a contract as Inside, with penalties.
Source and Disclaimer
Rates sourced from gov.uk Off-payroll working rules (IR35) guidance as of May 2026. This is an educational calculator and is not tax advice. Consult a contractor accountant before structuring contracts. Last updated: May 2026.
Source: gov.uk/guidance/understanding-off-payroll-working-ir35