How to Use the UK IR35 / Contractor Calculator
The UK IR35 / Contractor Calculator compares your take-home pay inside IR35 (where you're treated as an employee of your client) versus outside IR35 (where you operate through your own limited company). This is one of the most financially significant calculations a UK contractor can make.
Enter your day rate and working days per year. For outside IR35, the calculator models the optimal salary+dividends combination with company expenses. For inside IR35, it shows take-home after PAYE tax and NI applied to your deemed employment income via your umbrella company.
The key nuance is that IR35 status is determined contract by contract, not company by company. Key factors are: substitution rights (can you send a replacement?), control (does the client dictate how, when and where?), and mutuality of obligation (are both sides obligated to offer/accept work?). Since April 2021, large/medium clients determine IR35 status, not the contractor.
📊 Worked Example
£500/day, 230 days/year (£115,000 revenue):
- Outside IR35 take-home: ~£76,000–£80,000
- Inside IR35 take-home (umbrella): ~£57,000–£60,000
- IR35 cost: ~£18,000–£22,000/year less take-home
- Equivalent permanent salary outside IR35: ~£95,000 gross
Common Use Cases
- ✅ Comparing inside vs outside IR35 take-home pay for a contract decision
- ✅ Working out the day rate needed inside IR35 to match outside IR35 income
- ✅ Understanding the true cost of an inside IR35 engagement
- ✅ Deciding whether to negotiate a rate uplift for inside IR35 contracts
- ✅ Comparing contracting vs permanent employment financially
- ✅ Calculating take-home under an umbrella company vs PAYE
Frequently Asked Questions
What is IR35?
IR35 (now officially called the Off-Payroll Working rules) determines whether a contractor working through a limited company should be taxed like an employee. If inside IR35, you pay the same income tax and NI as an employee on the deemed employment income, losing tax advantages of limited company contracting.
How is IR35 status determined?
Three key tests: (1) Substitution — can you send a genuine replacement to do the work? (2) Control — does the client control how, where, and when you work? (3) Mutuality of Obligation — is the client obliged to offer work and are you obliged to accept? A genuine contractor has substitution rights, limited control, and no MOO.
Who determines IR35 status since April 2021?
For medium and large private sector clients (those meeting 2 of 3: 50+ employees, £10.2m+ turnover, £5.1m+ balance sheet), the client determines status and issues a Status Determination Statement (SDS). Small private sector clients: the contractor's company still makes the determination. Public sector: always the client.
What is an umbrella company?
An umbrella company employs contractors on behalf of their clients. For inside IR35 work, most contractors use an umbrella company because they can't use their limited company tax-efficiently. The umbrella deducts PAYE tax and NI before paying you. Legitimate umbrellas pay at least the National Minimum Wage with holiday pay accrual.
Can I have both inside and outside IR35 contracts simultaneously?
Yes. You can have one contract inside IR35 (paid via umbrella) and another outside IR35 (paid to your limited company) simultaneously. Your limited company simply invoices for the outside IR35 work as normal. Keeping them completely separate is essential for compliance.