UK Contractor Take-home Calculator 2026/27 — Inside vs Outside IR35
Compare your UK contractor take-home inside vs outside IR35 for the 2026/27 tax year. Uses current Corporation Tax (19% / 26.5% marginal / 25%) and the £12,570 optimal director salary + dividend split.
Last updated · Tax year 2026/27
| Annual turnover | £110,000 |
|---|---|
| Director salary (PA £12,570) | £12,570 |
| Corporation Tax | −£22,069 |
| Dividend tax | −£15,841 |
| Take-home | £72,090 |
Take-home pay
£72,090
34.5% effective tax rate Income Tax plus employee National Insurance as a percentage of your gross salary. Excludes pension, student loan, and HICBC.
- Monthly
- £6,008
- Weekly
- £1,386
- Daily
- £277
- Hourly
- £36.97
How contractor take-home works
Your status under the IR35 / off-payroll rules determines which tax regime applies.
Inside IR35
You’re treated as a PAYE employee of the end client (or umbrella company). Your full day-rate income passes through PAYE — Income Tax, Employee NI, often an apprenticeship levy charge. Net result resembles a normal salary at the equivalent annual gross.
Outside IR35
You’re genuinely self-employed and operate through a limited company. The usual structure is:
- Pay yourself a £12,570 director salary (uses Personal Allowance, no Income Tax, minimal Class 1 NI).
- Corporation Tax on remaining profits: 19% up to £50k, ~26.5% marginal in the £50–250k band, 25% above.
- Take post-CT profits as dividends: £500 tax-free allowance, then 8.75% / 33.75% / 39.35% based on the band your total income falls in.
The gap has narrowed post-2024
Three reforms reduced the outside-IR35 advantage:
- Employee NI cut from 12% → 8% (April 2024).
- Class 4 NI cut from 9% → 6%.
- Corporation Tax rose from flat 19% to up to 26.5% marginal.
At typical contractor day rates (£400-£600) and 220-day years, the take-home gap is now only a few thousand pounds per year — not the £5k+ it used to be. At lower day rates (£200-£300), outside IR35 still wins clearly.
What we don’t model
- Employers NI on inside-IR35 income (umbrella companies typically deduct this from your rate before PAYE, reducing your effective gross).
- Flat Rate VAT scheme savings (usually £500-£2,000 a year for outside IR35).
- Pension contributions from limited-company profits (employer pension relief is still a major outside-IR35 advantage).
- Entrepreneurs’ Relief / Business Asset Disposal Relief on company wind-up.
For these, consult a chartered accountant specialising in contractors.
Frequently asked questions
- What does inside / outside IR35 mean?
- Inside IR35 means HMRC treats your contract as disguised employment — you're taxed as a PAYE employee of the end client (or umbrella). Outside IR35 means you're genuinely self-employed and can operate through your own limited company.
- Is outside IR35 still worth it post-2024 NI cuts?
- Less so than before. With employee NI cut to 8%, Class 4 NI to 6%, and Corporation Tax up to 26.5% marginal, the gap has narrowed to a few thousand pounds at typical contractor rates. Still worth it at lower turnover (<£80k), closer to a wash at £100k+.
- How do you model outside IR35?
- We use the standard 'tax-efficient' structure: £12,570 director salary (uses full Personal Allowance, no Income Tax) + all remaining post-CT profits as dividends. Your £500 dividend allowance applies, then 8.75%/33.75%/39.35% dividend rates.
- What Corporation Tax rate do you apply?
- From April 2023: 19% on the first £50,000 of profit, effectively 26.5% on the marginal band £50,000–£250,000, and 25% above £250,000. 2023-24 used flat 19% for small profits before the reform took effect.
- Do you model IR35 pre-April-2021 rules?
- No — we assume the post-2021 off-payroll rules where IR35 status is determined by the end client (for medium/large businesses) or by you (for small-client engagements).