IR35 Take-Home Pay Calculator
Compare Inside vs. Outside IR35 net income based on your day rate.
Outside IR35 (LTD)
Operating via your own Limited Company
Annual Revenue:
£0
Taxes (Corp/Div):
£0
Annual Take-Home:
£0
Monthly Take-Home:
£0
Inside IR35 (Umbrella)
Operating as a "disguised employee"
Gross Assignment:
£0
Employment Taxes*:
£0
Annual Take-Home:
£0
Monthly Take-Home:
£0
*Includes Employer NI, Apprenticeship Levy, Employee NI, and PAYE Income Tax based on standard 2024/25 UK tax bands.
Understanding IR35 and Your Day Rate
The "Off-Payroll Working" rules, commonly known as IR35, are designed to ensure that contractors who work like employees pay similar levels of Income Tax and National Insurance. The difference in take-home pay between being "Outside IR35" and "Inside IR35" can be substantial, often ranging from 15% to 25% of your total income.
Inside IR35 vs. Outside IR35
- Outside IR35: You are considered a legitimate business. You can pay yourself a small salary and the rest in dividends, which are not subject to National Insurance. You can also deduct valid business expenses before calculating Corporation Tax.
- Inside IR35: You are taxed as an employee. If using an Umbrella company, the "Day Rate" provided by the agency must cover Employer's National Insurance (13.8%) and the Apprenticeship Levy (0.5%) before your gross salary is even calculated.
Example: £500 Day Rate Comparison
At a £500 day rate working 230 days a year, your gross revenue is £115,000.
If Outside IR35, your net take-home might be approximately £82,000 after Corporation Tax and Dividend Tax.
If Inside IR35, your net take-home might drop to approximately £64,000 because you must pay the full weight of PAYE taxes plus the employer's tax contributions typically deducted from the umbrella rate.
Key Factors Influencing Your Net Pay
- Pension Contributions: Salary sacrifice into a pension is one of the most effective ways to reduce your tax bill, especially if you are Inside IR35 and hitting the 40% or 45% tax brackets.
- Business Expenses: Outside IR35 contractors can claim equipment, travel, and home office costs, whereas Inside IR35 contractors generally cannot claim expenses against their tax bill.
- VAT: Most Outside IR35 contractors use the Flat Rate VAT scheme or standard VAT scheme, which can provide a small additional margin for the business.