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 10.75%/35.75%/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).

£1000/day Contractor Take-home UK 2026/27

At £1000/day × 220 days (£220,000 turnover), outside IR35 you'd keep £117,844/year. Compare with Inside IR35 below.

Take-home pay

£117,844

46.4% effective tax rate

Monthly: £9,820
Weekly: £2,266
Daily: £453
Hourly: £60.43

Annual turnover	£220,000
Director salary (PA £12,570)	£12,570
Corporation Tax	−£51,219
Dividend tax	−£50,937
Income Tax (PAYE)	−£0
National Insurance	−£0
Take-home	£117,844

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Your salary in context

ONS · HMRC · CPI

Annual turnover

At £1000/day × 220 days, your annual turnover is £220,000.
Outside IR35 take-home

You keep £117,844 a year (£9,820/month) — effective rate 46.4% of turnover.
Inside vs Outside comparison

Inside IR35 on the same contract would give £128,386 — that's £10,543 less than your current option.
Corporation Tax

After £12,570 director salary, profits of £207,430 pay £51,219 Corporation Tax (effective 24.7%). Distributable: £156,211.
Take-home vs turnover

For every £100 of turnover you keep about £54 after all UK taxes.

Nearby salaries

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 10.75%/35.75%/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).