How it’s worked out
IR35 decides whether a contract is taxed like self-employment or like employment. Outside IR35 you can work through your own limited company and pay yourself a low salary plus dividends. Inside IR35 your pay is taxed like a salary, usually through an umbrella company, and the employer's National Insurance and apprenticeship levy come out of your rate.
This calculator works out your yearly take-home outside IR35 through a limited company, using a £12,570 salary and dividends for the rest. It then searches for the inside IR35 day rate, through an umbrella, that gives the same take-home. It narrows the answer down 50 times by bisection, so the result is accurate to well under a penny.
Use the break-even rate when you negotiate. If an agency offers an inside role, you'll know what rate keeps you whole, and how much an outside role at your current rate is really worth.
For medium and large clients, the client decides your IR35 status and must give you a Status Determination Statement. For small clients, your own company decides. HMRC's CEST tool can help, but it isn't the final word.
Questions
How much more do I need inside IR35?
Typically 10% to 20% more per day to match an outside take-home, depending on your rate, costs and umbrella margin. Enter your own figures to see your number.
Who decides my IR35 status?
For medium and large private-sector clients and all public-sector clients, the client decides. For small private-sector clients, your own limited company decides.
Can I still use my limited company inside IR35?
Yes, but the fee-payer deducts tax and NI as if you were employed, and you lose most of the benefits of a limited company. Most inside contractors use an umbrella.
These figures are estimates for guidance only and aren’t financial or tax advice. Speak to an accountant before making decisions.