IR35 Calculator (2026/27)
Our calculator compares take-home pay for an outside IR35 contract via a limited company with an umbrella company engagement – commonly described in the contracting market as an ‘inside IR35’ role. Just enter your data into the inputs below.
Calculator – the nuances of the term ‘IR35’
Our calculator compares take-home pay for someone working via an umbrella company (what the contracting market commonly refers to as an inside IR35 role) and someone working through their own limited company on an outside IR35 engagement.
When a contractor is genuinely employed and paid through PAYE by an umbrella company, the IR35 status rules described here are not relevant to that engagement. The term ‘inside IR35’ is still widely used for these roles because clients often require contractors to work through an umbrella where they do not permit an outside IR35 limited company engagement.
A small minority of contractors continue to work on inside IR35 engagements through their limited companies. The tax treatment depends on which part of the IR35 legislation applies. Under Chapter 8, responsibility generally remains with the contractor’s intermediary, whereas under Chapter 10 the client makes the status determination and the fee-payer operates the relevant PAYE and National Insurance deductions. In either case, the tax advantages normally associated with an outside IR35 limited company engagement are substantially reduced.
‘Inside IR35’ (umbrella) calculator assumptions
- Umbrella margin – a fixed weekly or monthly fee charged by the umbrella.
- Umbrella fees – processing fees for pensions or add-ons. These are deducted before tax in the same way as the margin.
- Apprenticeship Levy – charged at 0.5% of payroll and funded from the contractor’s assignment rate where applicable.
- Employer NIC (umbrella) – an employment cost funded from the assignment rate before the worker’s gross taxable pay is calculated.
- Income Tax and employee NIC – based on 2026/27 thresholds, with Scottish Income Tax rates applied if selected.
- Pension contributions – treated as salary sacrifice where the umbrella allows it, which reduces taxable pay.
‘Outside IR35’ (limited company) calculator assumptions
- VAT – assumes the Flat Rate Scheme at 16.5% and that the company meets HMRC’s limited cost business test.
- Business expenses – any legitimate limited company expenses.
- Pension contributions – treated as legitimate employer contributions paid directly by the company.
- Dividend extraction – uses the 2026/27 dividend allowance and dividend tax bands. This includes the 2 percentage point increase to both the ordinary and upper dividend tax rates from 6 April 2026.
- Corporation Tax – assumes an effective rate of 23.35%, representative of a typical contractor company with profits in the Corporation Tax marginal relief band. The actual effective rate will vary according to company profits.
- Working days – default is 220 billable days per year. This can be adjusted to reflect gaps or holidays.
- No retained profits – the comparison assumes all post-tax profits are withdrawn by shareholders.