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What day rate inside IR35 equals my outside rate?
Your client has moved the engagement inside IR35 and offered to adjust the rate. This is the number that leaves you no worse off, and the reason it is lower than the 25% or 30% uplift contractors are usually told to ask for.
The short answer
At £500 a day outside IR35, you need about £534 a day inside through an umbrella to hold the same take-home. That is £34 a day, or 6.8%. The uplift falls as your rate rises, from about 14.3% at £300 a day to 1.7% at £900.
The equivalent rate at every day rate
Computed through the same tax logic that runs the calculator, on 220 billable days at 2026/27 rates. Assumptions are listed below the table.
| Outside IR35 rate | Inside rate needed | Uplift | Take-home matched |
|---|---|---|---|
| £300/day | £343/day | +£43 (14.3%) | £48,279/yr |
| £400/day | £437/day | +£37 (9.3%) | £58,669/yr |
| £500/day | £534/day | +£34 (6.8%) | £69,058/yr |
| £600/day | £668/day | +£68 (11.3%) | £79,018/yr |
| £650/day | £701/day | +£51 (7.8%) | £82,394/yr |
| £700/day | £734/day | +£34 (4.9%) | £85,769/yr |
| £800/day | £818/day | +£18 (2.2%) | £94,241/yr |
| £900/day | £915/day | +£15 (1.7%) | £104,048/yr |
Rates are rounded to whole pounds per day, so each row matches take-home to within roughly one rate step. Assumptions: £12,570 director salary, £1,500 accountancy, £350 insurance, £25 weekly umbrella margin, no expenses, no additional pension.
Why the uplift is smaller than you were told
The advice to ask for 25% or 30% more comes from a period that has ended. Before April 2023, corporation tax was 19%, dividend tax was lower, and a limited company contractor kept meaningfully more of every pound. Corporation tax at 25% and two rounds of dividend rate rises have compressed that advantage to a few thousand pounds a year at typical rates.
That has a direct consequence for a rate negotiation. If you open by asking for 30% and the true figure is 6.8%, you are not negotiating hard, you are making a claim your client can check and dismiss. A precise number you can defend, with the assumptions on the table, is a stronger position than a round one you cannot.
The uplift does not move in a straight line
Reading down the table, the required uplift falls overall but not evenly, and at £600 a day it rises again before resuming its fall. That is not an error in the arithmetic. The personal allowance is withdrawn at £1 for every £2 of income above £100,000, creating an effective 60% marginal band up to £125,140, and the two structures reach that band at different day rates because they route income differently. Where one curve is flattening and the other is not, the gap between them widens temporarily.
The practical implication: do not interpolate. If your rate is not on the table, use the calculator with your own figures rather than assuming the percentage between two rows.
What the equivalent rate does not cover
Matching take-home is not the same as being made whole, and treating the equivalent rate as your target rather than your floor concedes several things at once.
- Expenses. Very few are claimable through an umbrella following HMRC's 2016 changes, including travel to a regular workplace.
- Timing control. Outside IR35 you choose when to draw dividends and can spread income across tax years. Inside, you are on payroll.
- Your company. It still has filing obligations, and its accountancy costs do not vanish the moment one engagement moves inside.
- The umbrella margin assumed here is £25 a week. A higher margin raises the rate you need.
Before you accept a determination at any rate, it is worth checking whether the determination itself is sound. Our contract checker scores your agreement against the six factors tribunals weigh, and CEST vs IR35 Verdict shows where HMRC's tool and a case law assessment diverge on the same answers. If the determination is already settled, our guide to moving inside covers what changes and what you can still do.
Frequently asked questions
What day rate inside IR35 matches my outside IR35 rate?
At 2026/27 rates on 220 billable days, an outside IR35 rate of £500 a day needs roughly £534 a day inside via an umbrella to leave the same take-home. That is an uplift of about 7%. The uplift is not a fixed percentage: it runs from around 14% at £300 a day down to under 2% at £900, and it does not fall evenly, because the personal allowance taper bends the two take-home curves at different points.
Why is the uplift smaller than the 25% or 30% people quote?
Because the gap between inside and outside IR35 has narrowed. Corporation tax at 25% and two rounds of dividend tax rises removed most of the limited company advantage that existed before 2023. Figures quoting a quarter or a third more usually date from that era, or assume expense claims most contractors cannot make.
Does the uplift keep rising with my day rate?
No, it falls overall, and it does not fall smoothly. Above about £600 a day the required uplift drops sharply, because both structures are pushing income through the same higher rate bands and the limited company route loses its edge. The personal allowance taper between £100,000 and £125,140 affects the two structures at different day rates, which is why the percentage moves up and down rather than trending cleanly.
Should I ask for the equivalent rate or more?
The equivalent rate leaves you standing still on take-home, and standing still is not the same as being made whole. Inside IR35 through an umbrella you also lose the flexibility of dividend timing, and most business expenses. Treat the equivalent rate as the floor of the negotiation, not the target.
What assumptions does this use?
A £12,570 director 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 over 220 billable days. Change any of those and the equivalent rate moves, which is why the calculator lets you enter your own figures.
Does a salary sacrifice pension change the answer?
It changes the total value rather than the rate you need. Sacrificing income above the basic rate threshold into a pension recovers a large part of the inside IR35 tax hit, but the money is not accessible until pension age, so it does not help if you need the same cash each month. The calculator models it as a separate third scenario for that reason.