Outside IR35 calculator
Outside IR35, your day rate flows through your own limited company rather than a payroll: the company invoices the client, pays you a small salary (typically the £12,570 allowance), pays corporation tax at 19%–25% on what remains, and you draw the rest as dividends taxed at the 2026/27 dividend rates (figures checked 2026-08-28 against gov.uk). On a £500 day rate over 46 working weeks that chain typically delivers a noticeably higher take-home than the same rate through an umbrella, the reward for carrying the risks employment law removes. Most calculators for this are run by accountancy firms selling the structure, this one just shows the arithmetic, including the corporation tax marginal relief band between £50,000 and £250,000 that many of them silently skip, and the full path of every pound from invoice to bank account.
Calculator
Outside IR35 calculator
From £115,000 of contract revenue, into your pocket:
£69,932.00 a year
61% of revenue, taking a £12,570 salary and the rest as dividends.
Same day rate, inside IR35 (umbrella)
The same £500.00 day rate paid through an umbrella company, employer NI, apprenticeship levy and a typical £25/week margin taken from the rate before PAYE, leaves roughly £68,105.45 a year, against £69,932.00 outside. The outside-IR35 premium here is about £1,826.55 a year under these assumptions.
The money's path through the company
| Revenue (£500.00 × 5 × 46) | £115,000.00 |
| Director salary (limited to available company cash) | −£12,570.00 |
| Employer NI on that salary | −£1,135.50 |
| Company costs | −£5,000.00 |
| Company profit | £96,294.50 |
| Corporation tax (19-25% marginal relief) | −£21,768.04 |
| Dividends paid to you | £74,526.46 |
| Income tax and NI on director salary | −£0.00 |
| Personal dividend tax | −£17,164.46 |
| Your take-home (salary + dividends) | £69,932.00 |
Assumes one company with a full 12-month accounting period, no associated companies or Employment Allowance, all post-tax profit drawn as dividends, and no other income. Leaving profit in the company, pension contributions paid by the company, and VAT are the levers an accountant tunes, this shows the honest baseline. Inside IR35? Use the umbrella calculator instead.
What is IR35?
IR35 (the off-payroll working rules) is HMRC's test of whether a contractor working through their own limited company is genuinely in business, or is really an employee in disguise. If a contract is inside IR35, the pay must be taxed like a salary. PAYE income tax and National Insurance, usually via an umbrella company: and the limited-company structure's tax advantages disappear. If it is outside IR35, the company model on this page applies: corporation tax on profits and dividends at the dividend rates, with no NI on the dividend part. The difference on a £500 day rate is typically thousands of pounds a year, which is why status matters more than rate when comparing contracts.
Why outside IR35 pays more, and what it costs
The advantage is structural: dividends carry no National Insurance, the company deducts its costs before tax, and profit can be timed across years or paid into a pension by the company with no tax at all. Against that, you carry the risks employment law removes, no sick pay, no notice period, an accountant's fees, an insurance stack, and the possibility HMRC later decides the contract was really inside IR35, with back taxes to match. The gap between this page and the umbrella result on the same day rate is the price of that risk, decide whether it is being paid to the right side.
Inside or outside? Not your choice
For medium and large clients, the client determines your IR35 status, not you, delivered in a Status Determination Statement. Working practices (substitution, control, mutuality of obligation) decide it, and a wrong “outside” call now lands the liability on the fee-payer. Genuinely outside contracts exist; contracts that are outside-on-paper-only are where the horror stories come from. HMRC's own Check Employment Status for Tax (CEST) tool is the official way to test a contract's status.
Weighing this against a salaried offer is a different sum again, because a day rate has to cover employer National Insurance, unbilled days and the pension an employer would have paid. The contract vs permanent calculator compares the two on what you keep, and solves for the day rate that matches a given package.
Corporation tax figures checked 2026-08-28 by Hadi against gov.uk/corporation-tax-rates. Thresholds shrink with associated companies; VAT and expenses rules are not modelled. For a real structure decision, use an accountant, this page is the sanity check to bring to that meeting.
How to use the outside IR35 calculator
- 1
Enter your day rate and your billable days.
- 2
Set the salary you plan to draw from the company, usually a small one.
- 3
The rest is taken as dividends after Corporation Tax, which the tool applies.
- 4
Read the total take-home and the effective rate across the whole structure.
When should you use the outside IR35 calculator?
Use it when you work outside IR35 through your own company, to see what the salary and dividend split actually leaves you.
You are outside IR35
The salary-and-dividends split is what makes the limited company route worthwhile.
Compared with an umbrella
Outside IR35 the limited route usually pays more, and this shows by how much.
Deciding what salary to draw
A salary at the NI threshold usually gives the best overall result.
Pricing a contract
The rate has to cover Corporation Tax, accountancy and the gaps between contracts.
Where to go next
- Umbrella company calculatorTo the inside-IR35 comparison.Open
- Dividend tax calculatorTo the tax on the dividends you draw.Open
- Contract vs permanent calculatorTo compare the whole package with a salary.Open
All 51 calculators share one tested engine, so a figure from the outside ir35 calculator agrees with every other page here. See the full calculator index or the pay and tax guides.