£650/Day: Inside vs Outside IR35 Take-Home 2026/27

At £650/day over 220 billable days (£143,000 contract revenue), outside IR35 nets you £84,808 per year through a limited company, versus £76,346 per year inside IR35 via an umbrella. That is a difference of £8,462 per year (11.1% more), before accounting for accountancy fees you'd pay either way.

Operating through your own limited company at £650/day: salary of £12,570 (set to the personal allowance), employer NI of £1,136, accountancy fees of £1,500, leaving company profit of £127,794. After corporation tax of £30,115, dividends of £97,679 are available, taxed at £25,441. Total net take-home: £84,808/year, an effective deduction rate of 40.7%.

Working via an umbrella company at £650/day: after the umbrella margin of £1,040 and employer NI of £20,544 deducted from your contract rate, your deemed salary is £121,416. Income tax of £40,631 and employee NI of £4,439 bring net take-home to £76,346/year, an effective deduction rate of 46.6%.

On company profit of £127,794 (after salary, employer NI, accountancy fees, and expenses are deducted from £143,000 contract revenue), corporation tax at £650/day is £30,115. This includes marginal relief tapering between the 19% small profits rate and 25% main rate.

Inside IR35, the umbrella deducts Employer NI of £20,544 from your £650/day contract rate before calculating your deemed salary of £121,416. This is a key reason inside-IR35 take-home is lower than many contractors expect: the employer NI comes out of the rate you're quoted, not on top of it.

At £650/day over 220 billable days per year (the standard assumption after holidays, bank holidays, and gaps between contracts), your gross contract revenue is £143,000. This is the figure both the outside and inside IR35 calculations above are based on.

The outside IR35 (limited company) figures are unaffected by Scottish rates since they rely on dividend tax and corporation tax, which are UK-wide. The inside IR35 figures use England, Wales, and Northern Ireland income tax bands. If you are a Scottish taxpayer working inside IR35, your income tax will differ slightly due to Scotland's separate rate bands.

Yes. Company pension contributions reduce company profit before corporation tax outside IR35, and reduce deemed salary via salary sacrifice inside IR35. Both routes receive meaningful tax relief, but the exact effect on the £8,462 gap shown above depends on how much you contribute: adjust the pension slider in the calculator below to see it recalculated live at £650/day.