IR35 Calculator 2026/27
Updated for the 2026/27tax year · Last updated
Enter your annual contract value to see the real financial difference between inside and outside IR35 for the 2026/27 tax year. Outside IR35 models a limited company with a director salary and dividends; inside IR35 treats the full contract value as employment income.
IR35 — formally the off-payroll working rules — determines whether a contractor working through a personal service company (PSC) is treated as genuinely self-employed or as a disguised employee for tax purposes. If HMRC or your end client determines that your engagement is inside IR35, the fee-payer (usually the agency) deducts income tax and National Insurance contributions from your contract payments before passing the net amount to your company. The tax impact is substantial — typically £8,000 to £20,000 per year at common contractor rates.
For public sector bodies and medium/large private sector clients, the end client is responsible for determining your IR35 status and issuing a Status Determination Statement (SDS). For small private sector clients (fewer than 50 employees, turnover below £10.2m), the contractor can still self-assess. Getting this determination right matters: HMRC can pursue unpaid tax, interest, and penalties from the fee-payer for incorrect determinations, and from the contractor for incorrect self-assessments.
This calculator gives you the clearest measure of what a determination actually means in practice — the pound difference between your two take-home outcomes. Use it to decide whether to accept a contract at the offered rate inside IR35, negotiate a rate uplift to compensate, or take other contract structures.
Outside IR35
£59,248
take-home
Inside IR35
£56,958
take-home
| Item | Outside | Inside |
|---|---|---|
| Contract value | £80,000 | £80,000 |
| Corporation tax | − £13,324 | — |
| Income tax | − £4,428 | − £19,431 |
| National Insurance | — | − £3,611 |
| Take-home | £59,248 | £56,958 |
Outside IR35 assumes salary of £12,570+ remaining profits as dividends via a limited company. This is a simplified illustration — actual figures depend on your accountant’s structure.
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How this calculator works
The calculator models two distinct tax scenarios for the same contract value:
Outside IR35 (limited company model): The contract value is paid to your limited company. The company pays corporation tax at 19% (small profits rate, applicable for most one-person contractors). You pay yourself a director salary of £12,570 — equal to the personal allowance, so no income tax is due and National Insurance is nil at this level (the salary sits at the Primary Threshold). Remaining after-corporation-tax profits are distributed as dividends. Dividend tax is applied at 8.75% on dividends within the basic rate band (above the £500 dividend allowance), and 33.75% on dividends that fall in the higher rate band.
Inside IR35 (deemed employment): The contract value is treated as employment income subject to a deemed salary payment. Income tax is calculated on the full contract value using 2026/27 bands. Employee Class 1 National Insurance (8% between £12,570 and £50,270, then 2% above) is also deducted. Employer National Insurance (15% above the Secondary Threshold of £9,100) reduces the gross available to you before the employee deductions are applied — this is a significant cost that is often overlooked when contractors assess their inside IR35 position.
The difference: The gap between outside and inside take-home is the financial cost of an inside IR35 determination. This is the figure to reference when negotiating a rate uplift with an end client that has made an inside determination — the uplift should compensate you for the additional tax and NIC burden that a direct employee at the same total cost would not bear.