IR35 Calculator 2026/27
Inside vs outside IR35 for your day rate in 2026/27 — umbrella deductions (margin, 15% employer NI, levy, PAYE) versus limited-company corporation tax, salary and dividends — annual take-home each way, the difference and the inside rate needed to match.
| Gross contract value | — |
|---|---|
| Inside IR35 (umbrella): employer costs deducted from the rate | — |
| Inside IR35: taxable salary → tax and employee NI | — |
| Inside IR35: take-home | — |
| Outside IR35 (limited company): corporation tax | — |
| Outside IR35: salary + dividends and personal tax | — |
| Outside IR35: take-home | — |
| Difference | — |
| Rate uplift needed inside IR35 to match | — |
| Effective tax rate, inside vs outside | — |
In short
Inside IR35 the umbrella or agency deducts its margin, 15% employer NI and the 0.5% apprenticeship levy from your day rate before running PAYE, so take-home is typically 50–60% of the contract value; outside IR35 your limited company deducts expenses and pension, pays 19–25% corporation tax, and you take a £12,570 salary plus dividends taxed at 10.75% / 35.75%, netting about 60–70%. At 2026/27 rates the gap is a few thousand pounds at £120,000 of billing and much larger when the company funds a pension.
Who this is for: UK contractors comparing inside and outside IR35 contracts.
Inside vs outside IR35 in 2026/27
- Inside (umbrella / deemed employee): from the contract value the umbrella deducts its margin, 15% employer NI above £5,000 and the 0.5% levy, then runs PAYE (20/40/45% tax, 8%/2% NI). No expenses, no dividends; pension via salary sacrifice is the main lever. Typical take-home 50–60% of the rate.
- Outside (limited company): the company deducts expenses and pension, pays 19% corporation tax up to £50,000 of profit (26.5% marginal to £250,000, then 25%), and you take £12,570 salary plus dividends taxed at 10.75% / 35.75%. Typical take-home 60–70%.
- The gap has narrowed since the dividend-rate rises and corporation tax increase, but outside still wins by 8–15 points at most rates, and more if you pay into a pension from the company.
- Risk: an outside determination that HMRC overturns can mean back taxes for the fee payer (or you, for small clients). Keep contracts and working practices consistent with the status.
See also: UK Self-Employed Tax Calculator 2026/27, Director Salary vs Dividend Calculator 2026/27.
Assumptions
- Inside: contract value − umbrella margin = cost to employ; salary solved so that salary + 15% employer NI above £5,000 + 0.5% levy equals it; PAYE tax and 8%/2% NI on the salary.
- Outside: profit = contract − expenses − salary − employer NI − pension; corporation tax 19% / marginal relief / 25%; all post-tax profit paid as dividends; personal tax on salary + dividends.
- Rate uplift solved so inside take-home equals outside take-home plus pension.
Worked example
Inside IR35: after the £1,300 margin, employer NI and levy of about £15,400 come off the rate, leaving a salary of about £104,300; income tax and NI take about £34,100, so take-home is roughly £70,200 (58.0%). Outside IR35: profit after expenses, salary and employer NI is about £103,300; corporation tax about £23,600; dividends of about £79,700 plus the salary attract about £19,000 of personal tax — take-home about £73,200 (60.5%). Outside is ahead by about £3,050 a year at these inputs; the gap widens sharply if the company pays into a pension, and inside would need roughly £592 a day (an 8% uplift) to match.
Frequently asked questions
How much more do I take home outside IR35?
Typically 8–15% of the contract value — but with 2026/27 dividend rates and corporation tax the gap at £100,000+ of income can be only a few thousand pounds unless you use company pension contributions.
Who pays employer NI inside IR35?
The fee payer — but umbrellas deduct it from the assignment rate, so in practice it comes out of your money. Negotiate the rate on that basis.
Can I claim expenses inside IR35?
Generally no — travel and subsistence are not allowable for umbrella workers under supervision, direction or control. Salary-sacrifice pension is the main deduction.
Who decides my IR35 status?
Medium and large clients (and all public bodies) since April 2021; small clients leave the decision — and the liability — with your company.
What is a deemed employee?
A contractor working through their own company on an inside-IR35 contract: the fee payer deducts PAYE and NI as if they were an employee, without employment rights.
Can I claim the £5,000 trading allowance or flat-rate VAT outside IR35?
The trading allowance is for sole traders, not companies; the VAT flat-rate scheme can add a small surplus for low-cost businesses — see the flat-rate calculator.
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