IR35 Calculator — Inside vs Outside
Take-Home Pay 2025/26
Compare your inside IR35 vs outside IR35 take-home pay side by side. Uses the correct 2025/26 employer NI rate of 15% above £5,000 secondary threshold. Enter your day rate for an instant comparison.
| Gross contract income | — |
| Employer NI (15% above £5k) | — |
| Deemed salary | — |
| Income tax | — |
| Employee NI (8%) | — |
| Net take-home | — |
| Gross contract income | — |
| Salary + expenses + empr NI | — |
| Corporation tax | — |
| Dividend tax | — |
| Net take-home | — |
IR35 Calculator — Inside vs Outside Take-Home Pay 2025/26
Our free IR35 calculator is the most accurate tool available for UK contractors in 2025/26. It uses the correct employer NI rate of 15% above the £5,000 secondary threshold — updated from April 2025. Use this IR35 calculator to see exactly how much you lose by being inside IR35 versus working outside IR35 through your limited company. The side-by-side comparison shows the real cost of IR35 in pounds and pence at your specific day rate.
What Is IR35?
IR35 is HMRC's off-payroll working legislation. It determines whether a contractor working through a limited company is genuinely self-employed or should be treated as an employee for tax purposes. If your contract is caught inside IR35, you pay income tax and National Insurance as an employee. If your contract is outside IR35, you pay yourself salary and dividends — keeping significantly more. Use the IR35 calculator above to see the exact difference at your day rate.
Inside IR35 vs Outside IR35 — 2025/26 Comparison
The financial difference between inside and outside IR35 increased slightly in 2025/26 due to the employer NI changes. From April 2025, employer NI rose from 13.8% to 15% and the secondary threshold dropped from £9,100 to £5,000. This reduces the deemed salary for inside IR35 contractors, lowering take-home pay further.
| Factor | Inside IR35 | Outside IR35 |
|---|---|---|
| Tax treatment | As an employee | Salary + dividends |
| Employer NI (2025/26) | 15% above £5,000 | 15% on salary only |
| Employee NI | 8% on £12,570–£50,270 | Minimal (salary only) |
| At £500/day (220 days) | ~£61,000–£64,000/yr | ~£73,000–£77,000/yr |
How is the inside IR35 deemed salary calculated?
The deemed salary = Gross contract income − Employer NI (15% on earnings above £5,000). Income tax and employee NI (8%) are then applied to this deemed salary. Our IR35 calculator applies this formula automatically using the correct 2025/26 rates.
The Three IR35 Tests — Understanding Your IR35 Calculator Result
1. Substitution
You must have the contractual right to send a substitute to perform the work. If the client requires you personally, this points toward inside IR35. Substitution clauses must be genuine — not just inserted into a contract without reflecting reality.
2. Control
A genuine contractor controls how, when, and where the work is done. If your client dictates your working hours, method, and location — as they would with an employee — this points toward inside IR35.
3. Mutuality of Obligation
There should be no obligation for the client to offer ongoing work, and no obligation for you to accept it. An expectation of continuous work without re-engagement decisions suggests employment.
⚠ Always have your contracts reviewed
IR35 status depends on the actual working arrangements — not just what the contract says. A specialist IR35 solicitor or accountant should review your contracts before you begin a new engagement. Use HMRC's CEST tool for guidance.
📊 How to use this IR35 calculator accurately
This IR35 calculator works best when you enter your gross day rate — the amount invoiced to the agency or client before any deductions. The inside IR35 calculator applies the 2025/26 employer NI rate automatically. For the outside IR35 calculation, set your salary at £12,570 for the most efficient result. The IR35 calculator then shows your exact take-home under both scenarios side by side.
Outside IR35 — How Take-Home Is Calculated
Outside IR35, your take-home pay calculation through a limited company involves: (1) Pay yourself a salary at or near the personal allowance (£12,570) to minimise income tax and NI. (2) The company pays corporation tax on remaining profit. (3) You take the after-tax profit as dividends — using the £500 dividend allowance first, then paying 8.75% (basic rate) or 33.75% (higher rate) dividend tax. Our limited company tax calculator shows the complete picture.
If you are inside IR35, many contractors use an umbrella company instead of running a limited company, as the tax treatment is identical but the admin is simpler.