Outside IR35 Calculator
Working outside IR35 through a limited company, contractors typically take home 75–85% of their gross contract value, depending on expenses, salary/dividend split, and personal circumstances.
How much will you take home as a contractor working outside IR35? When your contract is outside IR35, you can operate through a limited company and pay yourself a mix of salary and dividends, which is typically more tax-efficient than PAYE employment.
This calculator estimates your take-home pay based on your day rate, working pattern, and a standard salary/dividend structure. This is an estimate only — your actual take-home depends on your accountant’s advice, expenses, and personal circumstances.
More Income and work calculators · All calculators · All guides
What this calculator does
This calculator models the outside IR35 limited company structure: a small salary (typically at the personal allowance), corporation tax on profits, and dividends from remaining profits. It shows your estimated take-home and compares it with working inside IR35.
Who it is for
UK contractors evaluating outside IR35 opportunities, freelancers setting up a limited company, and anyone comparing inside vs outside IR35 take-home pay.
How to use it
Enter your day rate, days per week, and weeks per year. Adjust the salary amount and add any expenses. Click 'See My Result' for your estimated take-home breakdown.
How the calculation works
Gross = day rate × days × weeks. A salary (default £12,570) is paid to avoid income tax. Corporation tax (19%) is applied to remaining profits. Net profit after corp tax is taken as dividends. Dividend tax uses 2025/26 rates: 8.75% basic, 33.75% higher, 39.35% additional. £500 dividend allowance applies.
Worked example
Day rate £500, 5 days/week, 46 weeks: Gross = £115,000. Salary = £12,570. Corporation tax = (£115,000 – £12,570) × 19% = £19,462. Dividends = £82,968. Dividend tax ≈ £8,800. NI on salary = £0. Total take-home ≈ £86,700/year (£7,225/month). Inside IR35 the same rate would give approximately £68,000 — a difference of around £18,700/year.
Assumptions and limitations
- Uses 2025/26 UK tax rates and thresholds
- Corporation tax at 19% (small profits rate)
- Dividend rates: 8.75% basic, 33.75% higher, 39.35% additional
- £500 dividend allowance applied
- Default salary set at £12,570 (personal allowance) — most accountants recommend this level
- Does not include accountancy fees, business insurance, or other company running costs
- Does not model employer’s NI on the salary (below secondary threshold at £12,570)
- This is an estimate — consult a specialist contractor accountant for exact figures
Frequently asked questions
What does outside IR35 mean?
Outside IR35 means HMRC considers you a genuine business, not a disguised employee. You can operate through a limited company and pay yourself via salary and dividends, which is typically more tax-efficient.
How much can I take home outside IR35?
Typically 75–85% of your gross contract value, depending on your day rate, expenses, and how you structure salary and dividends. Higher earners pay more in higher-rate dividend tax.
What is the difference between inside and outside IR35?
Inside IR35: taxed like an employee, take-home typically 55–65%. Outside IR35: operate through a limited company, take-home typically 75–85%. The difference for a £500/day contractor can be £15,000–20,000 per year.
Related calculators
- Car Salary Sacrifice Calculator — Car salary sacrifice gives up salary in exchange for a company car. You save Income Tax and NI on the sacrifice but pay BIK on the company c
- Day Rate Calculator — Enter your annual salary, hourly rate, or target income to calculate your equivalent day rate — or convert a day rate back to an annual figu
- EV Salary Sacrifice Calculator — EV salary sacrifice is highly tax-efficient because the EV Benefit in Kind percentage is just 4% for 2026/27. Income Tax + NI savings on the
- Full-Time Equivalent Salary Calculator — Use this full-time equivalent salary calculator to scale a part-time salary up to its full-time equivalent (FTE). FTE = part-time salary × f
- Holiday Accrual Calculator — Enter your annual entitlement and leave year dates to see how many days you have accrued so far and how many remain.
- Holiday Entitlement Calculator — Full-time UK workers are entitled to at least 28 days (5.6 weeks) of paid holiday per year including bank holidays. Part-time and irregular
Related guides
- Outside IR35 Explained for UK Contractors — What outside IR35 means, how it affects your take-home pay, and the key differences between inside and outside IR35.
- How to Calculate Your Freelance Day Rate — A practical guide to setting your day rate as a freelancer or contractor, including salary equivalence and market benchmarks.
- How Overtime Pay Works in the UK — Understand your overtime pay rights, how it is taxed, and how different multipliers affect your earnings.
- How Holiday Accrual Is Calculated in the UK — Learn how holiday builds up over a leave year and how to check how much you have accrued so far.
- Inside IR35 Explained: What UK Contractors Need to Know — A clear guide to working inside IR35, how it affects your take-home pay, and what it means for your contract.
- How Holiday Entitlement Works in the UK — A practical guide to understanding your statutory holiday entitlement as a UK worker, covering full-time, part-time, and irregular working patterns.
Sources and references
HMRC IR35 guidance (https://www.gov.uk/guidance/understanding-off-payroll-working-ir35), Corporation tax rates (https://www.gov.uk/corporation-tax-rates), Dividend tax rates 2025/26 (https://www.gov.uk/tax-on-dividends)
Last updated
Last reviewed: 2026-04-12.