IR35 Calculator UK
IR35 Calculator UK
What Is IR35?
IR35 is UK tax legislation designed to prevent tax avoidance by workers who supply their services through an intermediary (such as a limited company) but would be considered employees if they worked directly. This IR35 calculator UK helps you estimate the tax impact of being inside or outside IR35.
How to Use the IR35 Calculator
Enter your daily rate, working days per year, select your IR35 status (Inside/Outside/Unknown), add expenses and select your tax region. Click Calculate IR35 Impact to see the estimated tax and take-home pay difference.
How IR35 Works
- Outside IR35: You are genuinely self-employed. You pay Corporation Tax, Income Tax and National Insurance on dividends/salary.
- Inside IR35: You are deemed an employee. You pay Income Tax and National Insurance (employee and employer) on the full amount.
IR35 Example
Example: £500/day, 220 days/year, £5,000 expenses
- Revenue: £500 × 220 = £110,000
- Outside IR35: Corporation Tax ~£19,950, Income Tax ~£15,000, NI ~£2,500 → Take-home ~£72,550
- Inside IR35: Income Tax ~£33,000, Employee NI ~£6,000, Employer NI ~£13,000 → Take-home ~£58,000
- Difference: ~£14,550 less take-home inside IR35
Key Factors in IR35 Status
- Right of Substitution: Can you send someone else to do the work?
- Control: Who decides how, when and where the work is done?
- Mutuality of Obligation: Is there an obligation to offer and accept work?
- Financial Risk: Do you bear financial risk?
- Employee Benefits: Do you receive benefits like holiday pay or sick pay?
IR35 vs Umbrella Company
If you're inside IR35, many contractors use an umbrella company to handle payroll. The umbrella company acts as your employer, deducting Income Tax and National Insurance before paying you.
Common IR35 Mistakes
- Assuming you're outside IR35 — always check your actual status.
- Not using CEST — use HMRC's Check Employment Status for Tax tool.
- Ignoring expenses — expenses can reduce your tax liability.
- Using the wrong tax region — Scotland has different rates.
- Not accounting for employer NI — inside IR35, employer NI is significant.
Important: This calculator provides estimates only. IR35 status is complex and depends on individual circumstances. Always use HMRC's CEST tool and seek professional advice.
Important Assumptions and Limitations
- Tax year: 2025/26
- Corporation Tax: 19%
- Personal Allowance: £12,570 (standard)
- Assumes optimal salary/dividend mix for outside IR35
- No other deductions are included
- Results are estimates, not tax advice
Frequently Asked Questions
For more tax calculations, visit our Tax Calculator UK or Income Tax Calculator UK. For contractor pay, try our Pay Calculator UK.