# IR35 Calculator UK 2026/27 – Inside vs Outside Take-Home Pay

> Calculate the financial impact of IR35 in 2026/27. Compare your take-home pay inside and outside IR35 to see the true cost of being caught by the rules.

Unsure whether IR35 will hit you hard? See exactly how much take-home pay you'd lose by
falling inside IR35 compared to operating outside — so you can make an informed decision about your contracts.
This IR35 calculator compares your take-home inside and outside IR35, so you can see the real cost of an inside IR35 determination on your day rate.

IR35 — formally the off-payroll working rules — determines how much tax contractors pay. If a contract falls "inside IR35", you are taxed broadly as an employee, and your take-home pay drops significantly. Getting this wrong is expensive in both directions: HMRC can pursue years of unpaid tax, while declaring inside IR35 unnecessarily costs you money every month.

## What IR35 actually decides

IR35 asks one question: if you removed the limited company from the arrangement, would you be an employee of the client in all but name? If the answer is yes, the contract is inside IR35 and tax is deducted at source, much like PAYE. If the working relationship is genuinely that of an independent business, it is outside IR35 and you keep the tax advantages of operating through a company.

## The three tests that matter most

HMRC and the courts focus on three practical factors:

- Control — does the client decide what you do, how you do it, when and where? More control by the client points towards employment.

- Substitution — can you send someone else to do the work? A genuine right of substitution strongly supports being outside IR35.

- Mutuality of obligation — is the client obliged to offer work, and are you obliged to accept it? Ongoing obligation looks like employment.

Other factors include financial risk, whether you have your own equipment, how you are paid, and whether you are "part and parcel" of the client's organisation.

## Inside vs outside: what it costs

The financial difference is substantial. Outside IR35, a contractor can typically take a low salary plus dividends, reducing overall tax. Inside IR35, the full contract value is treated like salary, with income tax and National Insurance applied to almost all of it — often reducing take-home by 10–20%.

The calculator above models both scenarios from your day rate, working days and expenses, so you can see the real difference in pounds rather than in principle.

## Who decides — and who carries the risk

Since the 2021 reforms, for medium and large private-sector clients, and all public-sector bodies, the client issues a Status Determination Statement. But the contractor still carries real risk if the determination is challenged later. Smaller clients (broadly those meeting two or more of: turnover under £10.2m, balance sheet under £5.1m, fewer than 50 employees) leave the decision with you.

Documenting your working practices — contracts, statements of work, and how you actually operate day to day — is the best protection. A contract that says "outside" but behaves "inside" will be judged on the reality.

Compare your own inside and outside positions with the calculator above, and read our [self-assessment estimator](https://salarycal.co.uk/self-assessment-estimator/) for the company side.

## Frequently asked questions

### What is IR35 in simple terms?

IR35 (off-payroll working) rules decide whether a contractor working through their own limited company is treated as an employee for tax purposes. If you fall "inside IR35" you pay roughly the same tax and National Insurance as an employee, which typically reduces your take-home pay.

### How much does IR35 cost a contractor?

The cost of IR35 varies, but falling inside can reduce take-home pay by 10–20% compared with operating outside. It depends on your day rate, expenses and how much you would otherwise take as dividends.

### How do I know if a contract is inside or outside IR35?

Key factors are control, substitution and mutuality of obligation. If the client controls how, when and where you work, you cannot send a substitute, and they must offer you work, the contract is more likely to be inside IR35.