Outside IR35 Calculator UK
Calculate your take-home pay as a limited company contractor working outside IR35. Enter your day rate, working pattern, and pension contribution to see your net income after corporation tax and dividend tax.
| Item | Amount |
|---|---|
| Gross annual income | £0 |
| Pension contribution | £0 |
| Corporation tax (19–25%) | £0 |
| Post-tax profit | £0 |
| Dividend tax (8.75/33.75/39.35%) | £0 |
| Net take-home | £0 |
How to Use This Calculator
Getting an accurate picture of your take-home pay as an outside IR35 contractor takes just a few inputs.
Enter your day rate
Type or slide to set your daily contract rate. Typical rates range from £300 to £1,200 depending on your sector and experience.
Set your working pattern
Adjust the days per week and weeks per year to reflect your actual contract schedule. Most contractors work 5 days a week for 46 weeks, accounting for holidays and bench time.
Add pension and options
Include your pension contribution percentage and select your student loan plan and location. The results update instantly, showing your net take-home and full tax breakdown.
Outside IR35 Explained
Why limited company contractors typically pay less tax—and how the salary versus dividend structure works.
Operating through a limited company while outside IR35 is the most tax-efficient way to contract in the UK. Your company pays corporation tax at 19–25% on its profits, rather than you paying income tax and National Insurance on the full contract value as an employee would. This structure also allows you to claim legitimate business expenses, control the timing of your income extraction, and retain profits in the company for future investment. Over a full tax year the difference can be tens of thousands of pounds compared to an inside IR35 or umbrella arrangement.
The standard approach is to pay yourself a salary up to the personal allowance (£12,570), which incurs no income tax or employee NIC, and extract the remaining profit as dividends. Dividends are paid from post-corporation-tax profits and benefit from the £500 dividend allowance before being taxed at 8.75%, 33.75%, or 39.35%. This salary-first, dividends-second strategy is more efficient than taking all income as salary because it avoids employee and employer National Insurance on the bulk of your earnings while making use of lower dividend tax rates.
Worked Example
A real-world breakdown for a contractor on £650 per day, 5 days a week, 46 weeks a year, with no pension contributions.
| Item | Amount | Notes |
|---|---|---|
| Gross annual income | £149,500 | £650 × 5 × 46 |
| Corporation tax | £33,769 | Marginal rate between 50k–250k |
| Post-tax profit | £115,731 | £149,500 − £33,769 |
| Dividend tax | £29,614 | After £500 allowance |
| Net take-home | £86,117 | Effective rate: 42.4% |
This contractor keeps approximately £86,117 of their £149,500 gross income — an effective tax rate of 42.4%. The same contract inside IR35 would yield roughly £65,000–70,000 take-home, highlighting the tax advantage of the outside IR35 limited company structure. With a pension contribution of 10% (£14,950), the net take-home would be higher as corporation tax and dividend tax both decrease.
Assumptions and Limitations
Understanding what this calculator does and does not account for.
What’s included
- Corporation tax at marginal rates (19–25% with marginal relief)
- Dividend tax at 8.75%, 33.75%, and 39.35% bands
- £500 dividend allowance for 2026/27
- Company pension contribution treated as an expense
- Student loan plan selection for salary-related repayments
- Scottish income tax bands for salary element
What’s not included
- VAT — most contractors are VAT-registered but this does not affect profitability
- Personal salary — assumed to be covered by the personal allowance
- Business expenses — travel, equipment, professional fees reduce profit
- Capital allowances and R&D tax credits
- IR35 status is an assumed fact — always seek professional determination
- The Marriage Allowance, Blind Person’s Allowance, or other reliefs
Frequently Asked Questions
Common questions about outside IR35 contracting and limited company taxation.