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).

£200/day Contractor Take-home UK 2026/27

At £200/day × 220 days (£44,000 turnover), outside IR35 you'd keep £35,345/year. Compare with Inside IR35 below.

Take-home pay

£35,345

19.7% effective tax rate

Monthly: £2,945
Weekly: £680
Daily: £136
Hourly: £18.13

Annual turnover	£44,000
Director salary (PA £12,570)	£12,570
Corporation Tax	−£5,972
Dividend tax	−£2,683
Income Tax (PAYE)	−£0
National Insurance	−£0
Take-home	£35,345

Cite or embed - free under CC BY 4.0

Your salary in context

ONS · HMRC · CPI

Annual turnover

At £200/day × 220 days, your annual turnover is £44,000.
Outside IR35 take-home

You keep £35,345 a year (£2,945/month) — effective rate 19.7% of turnover.
Inside vs Outside comparison

Inside IR35 on the same contract would give £35,200 — that's £146 more than your current option.
Corporation Tax

After £12,570 director salary, profits of £31,430 pay £5,972 Corporation Tax (effective 19.0%). Distributable: £25,458.
Take-home vs turnover

For every £100 of turnover you keep about £80 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).