Know Your IR35 Status. Know What It's Worth.

Most IR35 calculators compare two numbers. That misses the option that often matters most, so this one models three, from the same day rate and the same billable days.

Outside IR35, through a limited company. Your company invoices the contract value, pays a director's salary, deducts allowable costs including accountancy and insurance, pays corporation tax on the remaining profit, and distributes the rest as dividends. You then pay dividend tax personally. The salary defaults to £12,570 because that is the point at which the personal allowance is used without triggering meaningful employee National Insurance.

Inside IR35, through an umbrella company. The assignment rate has to cover employer National Insurance, the apprenticeship levy and the umbrella's margin before any salary exists. That is the part contractors are most often surprised by: those costs come out of your rate, not the client's budget on top of it. What remains is paid as PAYE salary and taxed normally.

Inside IR35, with a salary sacrifice pension. The same umbrella mechanics, except that income above the basic rate ceiling is sacrificed into a pension before tax rather than taxed at 40%. The model sacrifices down to the £50,270 basic rate threshold automatically and caps the contribution at the annual allowance. This is the scenario that changes the answer most, and the one two-way calculators cannot show you.

There are about 260 weekdays in a year. Almost no contractor bills all of them. You take holiday, you get ill, contracts end a fortnight before the next one starts, and clients shut down over Christmas. A calculator that assumes 260 is not modelling a contractor, it is modelling an employee who is never absent, and it inflates every figure it prints.

The size of that distortion is worth being concrete about. At £500 a day, our model puts outside IR35 take-home at £69,058 on 220 billable days and £78,404 on 260. The assumption alone is worth £9,346 a year, which is nearly three times the £3,438 gap between operating outside IR35 and going through an umbrella at the same rate.

In other words, the billable days assumption moves the answer more than IR35 status does. If you are comparing our figures against another calculator and ours look low, check what it assumed about your working year before concluding it is more optimistic. You can change the figure to whatever your own year actually looks like.

On a £500 day rate over 220 billable days, the gross contract value is £110,000. Using the calculator's defaults, a £12,570 director's salary, £1,500 of accountancy fees, £350 of insurance, a £25 weekly umbrella margin, no expenses and no additional pension contributions, at 2026/27 rates:

• Outside IR35, limited company: £69,058 net a year.
• Inside IR35, umbrella: £65,620 net a year, a difference of £3,438.
• Inside IR35, salary sacrifice: £39,714 net a year, with £51,588 going into a pension. That is £91,302 of total value, but only £39,714 of it is money you can spend before pension age.

The third line is why we report take-home and pension separately rather than adding them into one headline. £91,302 is real, and it is also not the same thing as £91,302 in your bank account. Enter your own rate above to see the equivalent figures, and our guide to inside versus outside take-home walks through the same comparison at £400, £650 and £800 a day. If you have been offered a rate to move inside, see what rate inside IR35 matches your outside rate.

Being explicit about the limits is more useful than pretending there are none.

• Student loan repayments. These vary by plan type and would materially change the inside IR35 figures.
• Scottish and Welsh income tax rates. The model uses rest of UK bands.
• VAT and the flat rate scheme. VAT is generally neutral to take-home, but the flat rate scheme can produce a small surplus that is not modelled here.
• Mid-year status changes, multiple concurrent contracts, and income from outside your contracting work.
• Your actual IR35 status. The calculator tells you what each outcome is worth. It does not tell you which one applies to you.

For the status question, the contract checker reads your agreement against the six factors tribunals weigh, and CEST vs IR35 Verdict runs HMRC's tool and ours on the same answers so you can see where they diverge.