Calculate Your Take-Home Pay Inside or Outside IR35
Enter your day rate and our calculator returns two figures: what you would take home inside IR35, paid through an umbrella company, and what you could take home outside IR35 through your own limited company. The difference between them is the real cost of an inside determination.
How Your Inside IR35 Take-Home Pay Is Calculated
Inside IR35, you are taxed as an employee. The figure your agency quotes you, though, is not a salary. It is an assignment rate, and it has to cover the cost of employing you before any of it becomes your gross pay.
That gap is why the number surprises people. Here is where a £350-a-day rate actually goes.
Worked example: £350 per day, inside IR35, 2026/27 rates
| Per week | Per year | |
|---|---|---|
| Assignment rate (5 days at £350) | £1,750.00 | £91,000 |
| Umbrella company margin | −£25.00 | −£1,300 |
| Employer’s National Insurance (15% above £5,000) | −£211.48 | −£10,997 |
| Apprenticeship Levy (0.5%) | −£7.53 | −£392 |
| Your gross taxable pay | £1,506.00 | £78,312 |
| Income Tax | −£360.71 | −£18,757 |
| Employee’s National Insurance | −£68.79 | −£3,577 |
| Your take-home pay | £1,076.50 | £55,978 |
You keep £1,076.50 a week, or £4,664.85 a month. That amounts to 61.5% of the rate you agreed to.
Why Employer’s National Insurance Comes Out of Your Rate
Employer’s National Insurance is a cost your employer pays. It is not a deduction from your wages, and it should never appear as one on your payslip. So why is it deducted from your day rate as a contractor?
Inside IR35 through an umbrella company, the umbrella is your employer, and the only money it receives is your assignment rate. As employment carries statutory HMRC costs and obligations which all employers are required to abide by, these costs are a deduction from your rate.
It is taken from the assignment rate first, along with the Apprenticeship Levy and the umbrella’s margin. What remains is your gross pay, and your own tax and National Insurance are then deducted from it.
A compliant umbrella company will show you this in full, either on the payslip or in a separate reconciliation. If a provider cannot or will not show you the journey from assignment rate to gross pay, treat that as a warning sign.
The practical point: an inside IR35 assignment rate carries roughly 15.5% in employment taxes on top of your gross pay. When you compare a £350-a-day rate to a permanent salary, you are not comparing like with like. On the figures above, £350 a day inside IR35 is equivalent to a salary of around £78,300, not £91,000.
The Higher Your Rate, the Less You Keep
The percentage is not fixed. Employer’s NI applies to everything above £5,000, income tax steps up at £50,270, and the personal allowance starts to disappear above £100,000. At day rates above roughly £430, that last one begins to bite.
| Day rate | Take-home per month | Kept from assignment rate |
| £350 | £4,664.85 | 61.5% |
| £500 | £6,095.58 | 56.3% |
| £750 | £8,365.50 | 51.5% |
At £750 a day, just under half of what your client pays for you never reaches you.
Assumes 52 weeks at 5 days a week, a £25 weekly umbrella margin, tax code 1257L, no other income in the tax year, and England, Wales or Northern Ireland rates. No pension contributions or student loan repayments. Your own figures will differ, and the reasons are covered below.
Inside IR35 vs Outside IR35: What It Costs You
Outside IR35, you work through your own limited company. You pay corporation tax on profits, take a small salary, and draw the rest as dividends. There is no employer’s National Insurance on the bulk of your income, and that is where most of the difference comes from.
| Day rate | Inside IR35 (monthly) | Outside IR35 (monthly) | Annual difference |
| £350 | £4,664.85 | £[TBC] | £[TBC] |
| £500 | £6,095.58 | £[TBC] | £[TBC] |
| £750 | £8,365.50 | £[TBC] | £[TBC] |
The gap is the cost of the determination.
One thing worth being clear about, because it is where contractors can get into trouble: outside IR35 is not a choice you make. It is a determination based on how you actually work. This includes who controls the work, whether you could send a substitute, and whether there is an obligation on either side to offer and accept work. For medium and large private-sector clients, and for all public-sector clients, the end client makes that determination and bears the liability for getting it wrong.
You cannot elect to be outside because the take-home figure is better. What you can do is understand what actually drives status, and make sure your working arrangements and your contract reflect the reality. Our guides on working inside IR35 and working outside IR35 cover the tests in full.
What Counts as Inside IR35
IR35 asks a single question: if the intermediary company were removed, and you contracted directly with the client, would you look like an employee?
Three factors carry most of the weight.
- Control. How much say does the client have over what you do, when, where and how you do it? A contractor who is told which tasks to do next, in what order, and on which days looks like an employee.
- Substitution. Could you send someone else, suitably qualified, to do the work in your place? A genuine, unfettered right of substitution points strongly towards the outside. A right that exists on paper but that the client would never accept in practice carries little weight.
- Mutuality of obligation. Is the client obliged to offer you work, and are you obliged to accept it? An ongoing expectation of continuous work looks like employment.
HMRC and the courts look at the overall picture, including how the engagement actually operates rather than only what the contract says. Your status won’t be decided by a single factor.
For the full picture, including detailed tests and how to challenge a determination, see our inside IR35 guide.
How This Compares to HMRC’s Calculator
If you have been searching for an HMRC IR35 calculator, you have probably found CEST (Check Employment Status for Tax). It is worth knowing that CEST and this calculator answer completely different questions.
CEST tells you whether an engagement is inside or outside IR35.
It asks about substitution, control and financial risk, and returns a status determination. It does not tell you anything about money.
This calculator tells you what you take home once you know your status.
It does not assess status, and it cannot. It takes determination as a given and does the pay maths.
Most people looking for one end up at the other. If you need to establish status, CEST is the starting point, and your end client should be running it, not you. If you already know your status and want to know what it means for your income, you are in the right place.
CEST has known limits. It cannot return a determination in a minority of cases, and it weighs mutuality of obligation differently from some tribunal decisions. If your engagement is borderline, or if you disagree with a determination you have been given, that is a conversation worth having with an accountant rather than a tool.
What the Calculator Does Not Account For
The figures above are illustrations, not forecasts. Here is what will move your number and in which direction.
Pension Contributions
Lowers your taxable pay, so your take-home falls, but your total value rises. Usually the most effective lever available inside IR35. See below.
Student Loan Repayments
Lowers take-home. Plan 2 takes 9% of everything above £28,470, so on a £350 day rate, that is roughly £4,485 a year. Postgraduate loans add a further 6%.
Scottish Taxpayers
Lowers take-home. Scotland has six bands rather than three, and the higher rate starts at £43,662 rather than £50,270. On a £350 day rate, expect to be several hundred pounds a month worse off than the figures above.
Other Income in the Tax Year
Usually lowers take-home. Rental income, savings interest, dividends or a period of permanent employment all stack on top and can push more of your contract income into a higher band.
Part-Year Working
Lowers your annual figure, raises your effective retained percentage. If you work 40 weeks rather than 52, your annual income falls, but a larger share of it falls below the higher-rate threshold.
Your Umbrella's Margin
Varies. We have assumed £25 a week. Margins typically run between £15 and £30, and are sometimes set by the agency rather than by you. It is worth asking.
Your Tax Code
If you are not on 1257L, the figures change. A code with a K prefix, or a BR code from a second job, can make a substantial difference.
Reducing Your Tax Inside IR35
Inside IR35, most of the planning options are closed. Travel and subsistence between home and a single workplace is generally not claimable. The Flat Rate VAT Scheme does not apply. There is no dividend planning because there are no dividends.
One significant lever remains, however.
Pension Contributions Through Salary Sacrifice
Salary sacrifice reduces your gross pay before Income Tax and National Insurance are applied. The relief is immediate and given at your full marginal rate, with nothing to reclaim through a tax return.
The part people miss: sacrifice also reduces the employer’s National Insurance due on your pay. A good umbrella company will pass on that 15% saving to your pension pot rather than keep it. Over a year, that is a meaningful sum that would otherwise have gone to HMRC.
On a £350 day rate, sacrificing £1,000 a month reduces your take-home by considerably less than £1,000 and puts more than £1,000 into your pension once the employer’s NI saving is included.
The limits:
The annual allowance is £60,000, including employer contributions. It tapers for those with adjusted income above £260,000, down to a floor of £10,000.
Sacrifice cannot take your pay below the National Minimum Wage, which is £12.71 an hour in 2026/27. Your umbrella will cap the sacrifice if it breaches this.
Sacrifice cannot take your pay below the National Minimum Wage, which is £12.71 an hour in 2026/27. Your umbrella will cap the sacrifice if it breaches this.
Not every umbrella company offers salary sacrifice, and not every one that does passes on the employer’s NI saving. It is worth checking before you sign.
If you are moving between inside and outside engagements, or unsure whether your current arrangement is the right one, speak to one of our accountants. Fifteen minutes on the phone is usually enough to know whether there is anything worth changing.
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FAQs
- How Much Take-Home Pay Will I Get Inside IR35?
On a £350 day rate inside IR35, you would take home around £1,076 a week or £4,665 a month, which is roughly 61% of your assignment rate. The percentage falls as your rate rises, to around 56% at £500 a day and 51% at £750 a day.
- How Much Less Do You Earn Inside IR35 Compared to Outside?
Inside IR35, you lose the ability to draw dividends, and your assignment rate absorbs the employer’s National Insurance, currently 15% above £5,000. The exact difference depends on your rate and how your limited company is structured. Use the calculator above to compare the two figures at your own pace.
- Is the IR35 Calculator Free to Use?
Yes. The calculator is free, requires no sign-up, and does not ask for your contact details. Enter your day rate, and you will get both figures immediately.
- Can I Claim Expenses Inside IR35?
Very few. Travel and subsistence to a single workplace is generally not claimable, which is the expense most contractors care about. You may still claim genuinely business-specific costs, and pension contributions remain available and are the most effective option inside IR35.
- Does HMRC have an IR35 Take-Home Pay Calculator?
No. HMRC’s tool is CEST, which tells you whether an engagement is inside or outside IR35. It is a status tool, not a pay tool, and it will not tell you what you take home. This calculator does the pay side once your status is known.
- What Is an Inside IR35 Day Rate Worth as a Salary?
A £ 350-a-day rate inside IR35 is roughly equivalent to a £78,300 salary, not £91,000. The difference is the employer’s National Insurance, the Apprenticeship Levy and the umbrella margin, all of which come out of the assignment rate before your gross pay is set.
- Can I Pay Into a Pension Inside IR35?
Yes, and it is the strongest tax planning option available to you. Salary sacrifice through your umbrella reduces Income Tax, the employee’s National Insurance and the employer’s National Insurance at once. The annual allowance is £60,000, and the sacrifice cannot take your pay below the National Minimum Wage.
- What Is a Deemed Payment?
A deemed payment is the calculation used when your own limited company, rather than an agency or umbrella, has to account for IR35. It calculates the amount treated as employment income after allowable deductions, and then applies PAYE and National Insurance to it. Most contractors on agency assignments never encounter it, because the fee payer handles PAYE instead.
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