IR35 Comparison Tool
Compare estimated cash take-home for the same day rate using 2026/27 tax assumptions.
Estimated annual cash take-home gap
£3,080.81
Higher under Outside IR35 assumptions
Inside IR35 (Umbrella)
£5,216.75
per month net
Outside IR35 (Limited)
£5,473.49
per month net
What drives the difference?
Inside IR35: The assignment income funds the umbrella margin and employer National Insurance before PAYE and employee NI.
Outside IR35: The model includes company expenses, director-salary employer NI, corporation tax and personal dividend tax.
Financial Breakdown
| Metric | Inside IR35 | Outside IR35 |
|---|---|---|
| Gross Annual Income | £110,000.00 | £110,000.00 |
| Umbrella / company costs | £14,269.57 | £23,518.54 |
| Personal tax and employee NI | £27,129.38 | £14,799.60 |
| Pension contribution | £6,000.00 | £6,000.00 |
| Net Take-Home (Annual) | £62,601.05 | £65,681.86 |
Methodology
2026/27 assumptions
- • Uses England, Wales and Northern Ireland Income Tax bands; Scottish Income Tax is not modelled.
- • Inside IR35 assumes the entered day rate is the umbrella assignment rate and deducts the weekly umbrella margin.
- • Apprenticeship Levy and separate holiday-pay arrangements are excluded.
- • Outside IR35 assumes one company, no associated companies, a £12,570 director salary and available profits paid as dividends.
- • Corporation-tax marginal relief and the £500 dividend allowance are included.
- • This is an estimate, not tax or IR35-status advice.
UK Tax Rules for Contractors 2026/27
IR35 & Tax — FAQ
Everything you need to know about the differences between contracting Inside and Outside IR35.
What is the difference between Inside and Outside IR35?
IR35 is off-payroll working legislation designed to prevent 'disguised employment'. If a role is 'Inside', it's treated as employment for tax purposes. If 'Outside', it's a true business-to-business relationship.
Umbrella vs Limited: Which is which?
Inside IR35 usually requires an Umbrella company to handle PAYE, while Outside IR35 is typically managed through your own Limited Company (LTD).
Does Outside IR35 always produce more take-home?
Outside-IR35 company income can be paid through a salary-and-dividend mix, but company expenses, employer National Insurance on salary, corporation tax and dividend tax still apply. It is not guaranteed to produce more take-home, and tax treatment does not decide IR35 status.
Who decides if a role is Inside or Outside IR35?
Since April 2021, the end-client is usually responsible for determining IR35 status, unless they are a 'small' company.