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UK · 2025/26

IR35 Calculator

Calculate take-home pay inside IR35. See how much you keep from your contract rate after PAYE tax and NI.

Last reviewed: 12 August 2025Source: HMRC — Off-payroll working (IR35)Updated every: tax year
IR35 Calculator · UKBusiness & Freelance

Rates & sourcespost-Apr 2021

IR35 (off-payroll working). Since Apr 2021 medium/large private-sector clients decide status. Inside-IR35 means PAYE + employee NI.

Client-size thresholdTurnover £10.2m · balance £5.1m · employees 50
Small-company exemptioncontractor self-assesses
Deemed-payment taxIncome Tax + employee NI

Source: HMRC — Off-payroll working (IR35) — figures refreshed at the start of each tax year.

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When to use this calculator

  • Before pricing a job, setting margin targets, or reviewing hiring costs.
  • When you want to test sensitivity around volume, VAT, markup, or overhead changes.
  • When you need a practical estimate before committing to a budget or proposal.
  • When you are modelling break-even volume and want to see how it shifts as overheads or prices change.
  • When you are preparing a quote and need to verify that the margin holds after materials, labour, and VAT are accounted for.

Worked example: £500/day, 220 days, both scenarios

Use these sample inputs as a quick scenario test, then change one variable at a time to compare outcomes.

Annual contract value

£110,000

Outside IR35 — Ltd Corp Tax (~25% effective)

£25,300

Outside — dividend take-home

~£72,400

Inside IR35 — deemed payment after employer NI

~£95,650

Inside — PAYE income tax + NI

~£28,500

Inside take-home

~£67,150

Difference

+£5,250 outside

Outside-IR35 is ~7.8% better at this contract value. Inside-IR35 day rates need to compensate, typically by 15-20%, to match.

How to read your results

Contract Value

Use this metric to compare scenarios side by side and understand how changes in the key inputs drive the final outcome. If the figure surprises you, isolate one variable at a time and rerun the calculation to identify which assumption is responsible.

Gross Pay

Use this metric to compare scenarios side by side and understand how changes in the key inputs drive the final outcome. If the figure surprises you, isolate one variable at a time and rerun the calculation to identify which assumption is responsible.

Tax+NI

Review this figure alongside your gross income so you can understand the true cost of deductions and plan around any thresholds before the tax year closes. If the figure looks higher than expected, check whether any pension or gift-aid contributions could reduce your taxable income.

Take-Home

Use this metric to compare scenarios side by side and understand how changes in the key inputs drive the final outcome. If the figure surprises you, isolate one variable at a time and rerun the calculation to identify which assumption is responsible.

Method & assumptionsAuthoritative sources

This calculator estimates the tax liability on a contract engagement under both inside-IR35 and outside-IR35 assumptions, helping you quantify the financial difference before accepting a role. For the inside-IR35 scenario it applies income tax and National Insurance to your deemed employment income after a 5% expenses allowance (no longer available to most contractors since 2017, but retained for public sector grandfathered cases — check which applies). Employer National Insurance at 13.8% is deducted from the contract rate to arrive at deemed salary.

For the outside-IR35 scenario it models a typical small salary plus dividends structure. Dividend tax rates and income tax bands used are indicative; always verify current rates with HMRC or a qualified accountant before making decisions based on this output.

Common mistakes

  • !Using optimistic assumptions without testing a more cautious scenario as well.
  • !Comparing outputs from different tools without checking that the inputs match.
  • !Treating the result as a final quote instead of a planning estimate.
  • !Forgetting to include employer National Insurance contributions when modelling the true cost of a new hire.
  • !Using revenue figures in place of gross profit when calculating margin percentage, which produces a misleadingly high result.

What to do next

  • Try at least one more scenario with a lower price or higher cost so you can see the margin floor.
  • Use the related calculators below to cross-check VAT, payroll, or break-even figures from another angle.
  • Open one of the linked guides if you need more context before you finalise a quote or budget.
  • If the margin is tighter than expected, identify which single input has the biggest impact and focus any negotiation there first.
  • Keep a record of the assumptions behind this estimate so you can revisit and update it when costs or volumes change.

Go deeper — 2 guides reference this calculator

Frequently asked

Inside IR35 you lose the tax efficiency of taking salary plus dividends. Most contractors take home 15–25% less inside IR35 compared to outside, depending on rate and personal circumstances.

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