IR35 Calculator 2026/27

It depends on your day rate, but the difference is typically £15,000–£30,000 per year at common tech contractor rates of £500–£800/day. The gap is larger at higher day rates because dividend tax rates are lower than income tax rates at higher income levels. Use the calculator above to see the exact figure for your situation.

The most common approach is to pay a salary equal to the personal allowance (£12,570) so no income tax is due on the salary. Since the National Insurance primary threshold also sits at £12,570 in 2026/27, no employee NI is due either. Note that employer NI (15% above the £5,000 secondary threshold) is still payable by the company on this salary, which works out to approximately £1,136 per year.

The small profits rate is 19% on annual company profits up to £50,000. The main rate is 25% on profits of £250,000 or more. Companies with profits between £50,000 and £250,000 benefit from marginal relief, which tapers the rate between 19% and 25%. Most contractors with day rates below £750/day will pay at or near the small profits rate.

When you are inside IR35 and working via an umbrella, the umbrella deducts Employer National Insurance (15% above the £5,000 secondary threshold in 2026/27) from your contract rate before calculating your deemed salary. This is why inside-IR35 take-home is lower than people expect: the employer NI comes out of your day rate, not on top of it.

In most cases, no. The off-payroll working rules mean that inside-IR35 contractors are treated as employees for tax purposes. Travel and subsistence expenses to a regular client site are not deductible in the same way as for a genuine business. Some exceptions exist for wholly business-related expenses but the rules are restrictive. This is another factor that reduces inside-IR35 take-home.

Yes, significantly. For outside-IR35 contractors, employer pension contributions from your limited company are a business expense that reduces your company's taxable profit before corporation tax is calculated. For inside-IR35 contractors, salary sacrifice into a pension reduces the deemed salary subject to PAYE. In both cases, pension contributions receive meaningful tax relief that improves the overall financial picture.

Yes. Since April 2021, medium and large private-sector clients must issue a Status Determination Statement (SDS) with reasons. You can formally dispute the determination and the client must respond within 45 days. If you believe your working practices genuinely support outside status (substitution rights, lack of control, financial risk), it is worth requesting a review, particularly for longer engagements where the financial stakes are significant.

No. As of 2026, the off-payroll working rules introduced in 2021 remain fully in force for medium and large private-sector clients. HMRC continues to actively enforce IR35 compliance. Any rumours of abolition or suspension circulating online refer to a brief period in 2022 that was reversed within weeks. The rules are not expected to change in the near term.

Since April 2021, liability sits with the fee-payer in the supply chain (usually the client or agency), not the contractor, if the wrong determination is made in good faith. However, if you operate outside IR35 without a proper SDS or against a determination, HMRC can pursue back taxes, interest, and penalties. Contractors working through their own limited company on contracts with no SDS in place face the greatest personal risk.

If you are inside IR35, the net take-home difference between an umbrella company and operating via your own limited company is small, because both structures result in PAYE taxation on the deemed salary. The main advantages of an umbrella for inside-IR35 contractors are simplicity (no company admin, no accountancy fees) and continuity of employment record for mortgage applications. The main advantage of keeping your limited company is flexibility if you take outside-IR35 contracts in the future.

Multiply your day rate by your expected billable days per year. Most UK contractors bill 220 days per year after accounting for public holidays, leave, and gaps between contracts. At 220 days, a £600/day rate equals £132,000 gross per year. Use the day rate to annual salary calculator linked below for a precise figure, then return here to see the inside vs outside IR35 net pay difference on that annual equivalent.