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Instant answer for £850/day · 220 days
At £850/day (£187,000/year contract revenue), outside IR35 nets you £99,301/year through a limited company, versus £97,463/year inside IR35 via an umbrella. That's £1,838/year more (1.9%) outside IR35.
Outside IR35 take-home
£99,301
Effective rate 46.9%
Inside IR35 take-home
£97,463
Effective rate 47.9%
Difference
+£1,838
1.9% more outside IR35
Adjust the day rate, working days, expenses, or pension to explore other scenarios
230 days = 46 weeks billed, allowing for holiday and downtime
Equipment, software, training, travel. £1,500 accountancy already included.
Company pension (outside) or salary sacrifice (inside). Reduces taxable income.
Common day rates:
Limited company
£103,090
Effective tax rate: 47.3%
Umbrella company
£101,363
Effective tax rate: 48.2%
Being outside IR35 puts £1,727 more in your pocket per year (1.7% more than inside IR35)
Contract revenue: £195,500 · Working days: 230 · Day rate: £850
Calculations use 2026/27 UK tax rates. Outside IR35 assumes optimal salary/dividend structure with a fixed director salary of £12,570, employer NI at 15% above the £5,000 secondary threshold, and £1,500 accountancy fees. Inside IR35 assumes a compliant umbrella company deducting employer NI and the 0.5% apprenticeship levy before deemed salary. Pension contributions are assumed to be company contributions (outside) or salary sacrifice (inside). Figures are estimates only. Consult a qualified contractor accountant before making decisions.
Outside IR35 (limited company)
Contract revenue
£187,000
Salary
£12,570
Employer NI
−£1,136
Accountancy fees
−£1,500
Company profit
£171,794
Corporation tax
−£41,775
Dividends available
£130,019
Dividend tax
−£40,774
Net take-home
£99,301
Inside IR35 (umbrella)
Contract revenue
£187,000
Umbrella margin
−£1,040
Employer NI
−£23,498
Apprenticeship Levy (0.5%)
−£808
Deemed salary
£161,654
Income tax
−£58,947
Employee NI
−£5,244
Net take-home
£97,463
Assumes 220 billable days/year, £0 expenses, 0% pension contribution, single person with standard allowances. 2026/27 HMRC rates.
At £850/day over 220 billable days (£187,000 contract revenue), outside IR35 nets you £99,301 per year through a limited company, versus £97,463 per year inside IR35 via an umbrella. That is a difference of £1,838 per year (1.9% more), before accounting for accountancy fees you'd pay either way.
Operating through your own limited company at £850/day: salary of £12,570 (set to the personal allowance), employer NI of £1,136, accountancy fees of £1,500, leaving company profit of £171,794. After corporation tax of £41,775, dividends of £130,019 are available, taxed at £40,774. Total net take-home: £99,301/year, an effective deduction rate of 46.9%.
Working via an umbrella company at £850/day: after the umbrella margin of £1,040, employer NI of £23,498 and the 0.5% apprenticeship levy of £808 are deducted from your contract rate, your deemed salary is £161,654. Income tax of £58,947 and employee NI of £5,244 bring net take-home to £97,463/year, an effective deduction rate of 47.9%.
On company profit of £171,794 (after salary, employer NI, accountancy fees, and expenses are deducted from £187,000 contract revenue), corporation tax at £850/day is £41,775. This includes marginal relief tapering between the 19% small profits rate and 25% main rate.
Inside IR35, the umbrella deducts Employer NI of £23,498 and the apprenticeship levy of £808 from your £850/day contract rate before calculating your deemed salary of £161,654. 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 £850/day over 220 billable days per year (the standard assumption after holidays, bank holidays, and gaps between contracts), your gross contract revenue is £187,000. 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 £1,838 gap shown above depends on how much you contribute: adjust the pension slider in the calculator below to see it recalculated live at £850/day.
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Figures use 2026/27 HMRC rates and assume 220 billable days/year, £0 expenses, and 0% pension contribution for a single person with standard allowances. Does not model Scottish income tax for the inside-IR35 figure, benefits in kind, or marginal corporation tax relief nuances. Always verify your IR35 status and tax position with a qualified accountant.