Does inside IR35 reduce take-home pay?

Often yes, because PAYE deductions and employment costs can reduce the assignment income available as salary.

Is outside IR35 always better?

Not always. Outside IR35 results depend on company expenses, salary, corporation tax, dividends, and professional advice.

IR35 Take-Home Pay Calculator - Inside vs Outside IR35 Net Pay

How to use this calculator

Enter the contract day rate, expected working pattern, IR35 status, pension contribution, student loan plan, other taxable income, and tax year. The calculator converts the rate into annual revenue and applies the relevant inside or outside IR35 strategy.

How the calculation works

Inside IR35 treats the assignment as an umbrella-style PAYE calculation after umbrella margin, employer National Insurance, apprenticeship levy, pension, Income Tax, employee National Insurance, and student loan deductions. Outside IR35 models a simplified limited company route with salary, expenses, corporation tax, dividends, and dividend tax assumptions.

annual_revenue = day_rate * days_per_week * weeks_per_year
take_home = revenue - employment_or_company_deductions

Example calculation

A £550 day rate for 5 days over 46 weeks creates £126,500 annual contract revenue. With the default inside IR35 assumptions, the result separates assignment income from taxable salary before estimating net annual, monthly, and weekly pay.

Important considerations

IR35 status is engagement-specific. Actual take-home can change because of umbrella terms, agency deductions, pension method, tax code, Scottish tax position, accounting period, allowable expenses, associated companies, and dividend timing.

FAQ

Can this decide my IR35 status?

No. Use it after a status decision or alongside a formal review. The IR35 Status Indicator can help structure status questions.

Why are inside and outside results different?

Inside IR35 is closer to PAYE employment taxation. Outside IR35 can involve company profit, corporation tax, and dividends, so the timing and assumptions differ.

Disclaimer

Results are estimates for informational planning only and are not tax, financial, legal, employment, or accounting advice. Verify the tax year assumptions and speak to a qualified professional before making decisions.