Contractor / IR35 Calculator
Compare estimated take-home pay working inside IR35 (taxed like an employee) against outside IR35 through your own limited company.
| Step | Inside IR35 | Outside IR35 |
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Start here
How to use this calculator
This compares two ways the same contract income could be taxed — it doesn’t tell you which IR35 status applies to your engagement, which depends on your actual working practices.
Enter your contract income
Your total annual billings for this contract, before any deductions.
Set your outside-IR35 assumptions
Business expenses and the salary you’d draw from your own limited company — dividends make up the rest.
Compare the two take-home figures
See the full breakdown of tax, National Insurance, Corporation Tax and dividend tax for each route.
What IR35 actually means
Inside vs outside IR35
IR35 — the off-payroll working rules — exist to stop contractors using a personal service company to work like an employee while paying less tax than one. If your engagement is inside IR35, you’re taxed broadly as if you were employed: for medium and large private-sector clients, the fee-payer (usually the recruitment agency) deducts Income Tax and employee National Insurance from what’s paid to you, in real time, on every invoice.
Employer National Insurance and the Apprenticeship Levy are not legally deducted from your payment under these rules — HMRC guidance says they “should be paid on top” by the fee-payer. In practice, though, the day rate on offer for inside-IR35 contracts often already reflects the client’s expectation of covering that cost, even though it isn’t taken from your specific invoice.
If your engagement is outside IR35, you operate through your own limited company as a genuine business, typically paying yourself a modest salary plus dividends from company profits after Corporation Tax.
Who decides your status
Client-led vs contractor-led status
For medium and large private-sector clients, the client decides your IR35 status and must issue you a Status Determination Statement. For small clients — meeting at least two of: turnover £15 million or less, balance sheet total £7.5 million or less, and 50 employees or fewer — your own company still self-assesses status, as it has since IR35 began in 2000.
Questions
Common questions
Does this calculator tell me if I’m inside or outside IR35?
No. IR35 status depends on your actual working practices — control, substitution, mutuality of obligation and more — not on how much you earn. This tool only compares the tax outcome of each scenario once status is already known or assumed.
Why might the outside-IR35 figure be lower than I expected?
Dividend tax rates rose to 10.75%/35.75%/39.35% from April 2026, and Corporation Tax, employer National Insurance on your salary, and dividend tax all apply in sequence outside IR35 — several layers of tax that inside IR35 doesn’t have. The gap between the two routes has narrowed considerably compared to some previous tax years.
Why is the default salary £12,570?
£12,570 matches the standard Personal Allowance, so a salary at this level usually means no Income Tax is due on it. It’s a common starting point for contractor limited companies, though the right salary for you depends on your own circumstances — including whether you want to keep building a qualifying year for the State Pension.
Does this include the Apprenticeship Levy?
Not as a deduction — the Levy only applies once a company’s total annual pay bill exceeds £3 million (after a £15,000 allowance), which essentially never applies to a one-person contractor company, so it’s left out to avoid cluttering the numbers with something that will show as zero.
What about VAT?
This calculator ignores VAT, since it’s generally a pass-through cost for VAT-registered contractors (charged on top of fees and paid on to HMRC, net of the VAT reclaimed on expenses) rather than something that changes your personal take-home pay.
Where these figures come from. Income Tax, employee and employer National Insurance rates and thresholds, Corporation Tax rates and marginal relief thresholds, the Apprenticeship Levy, dividend tax rates, and the off-payroll working (IR35) fee-payer rules are all taken from gov.uk. Figures checked on 25 September 2026.
Fee-payer responsibilities under the off-payroll working rules (gov.uk) · National Insurance rates (gov.uk) · Corporation Tax rates (gov.uk) · Dividend Tax Calculator · Self-Employed Tax Calculator
How we calculate · Editorial policy. This is general information, not legal, financial or IR35-status advice.