IR35 Calculator
Compare your take-home pay inside vs outside IR35. See the real financial cost of your employment status determination.
Compare your take-home pay inside vs outside IR35. See the real financial cost of your employment status determination.
| Item | Inside IR35 | Outside IR35 |
|---|
IR35 (off-payroll working rules) determines whether a contractor working through a limited company should be treated as an employee for tax purposes. If inside IR35, you pay broadly the same tax as an employee. If outside, you can take dividends more tax-efficiently.
Since April 2021, medium and large private sector companies determine IR35 status. Small companies leave the decision to the contractor.
📌 Rates sourced from IR35 off-payroll working rules — verified for the 2026/27 tax year.
IR35 (the off-payroll working rules) is UK tax legislation designed to ensure contractors who work like employees pay broadly the same tax as employees. If a contract is deemed "inside IR35", the contractor's company must calculate and pay PAYE tax and National Insurance on the income as if it were employment income.
Inside IR35, you lose the ability to pay yourself via low salary plus dividends. Your deemed employment income is taxed via PAYE (income tax at 20%/40%/45% plus employee NI at 8%/2%). The company also pays employer NI at 15% on the income above £5,000. This typically costs contractors £10,000–£20,000+ per year depending on contract rate.
For public sector and large/medium private sector clients, the end client (or their agency) decides your IR35 status — not you. Small private sector companies (fewer than 50 employees, turnover under £10.2m, balance sheet under £5.1m) are exempt and the contractor's own company makes the determination.
Inside IR35, allowable expenses are very restricted. You can claim travel to temporary workplaces, professional subscriptions, and equipment not provided by the client. The 5% expenses allowance for running a PSC was abolished for public sector workers in 2017 and private sector in 2021.