IR35 Guide
What Is an IR35 Calculator?
An IR35 calculator helps contractors estimate the tax effect of being treated as employed for tax purposes under the UK's off-payroll working rules. Contractors often quote work using a daily rate rather than an annual salary, which can make it harder to see how PAYE Income Tax and National Insurance may affect the amount ultimately available after deductions.
This calculator converts a day rate into estimated annual contract income using the number of billable days and working weeks you enter. It then estimates the deemed employment pay and applies 2026/27 Income Tax and employee Class 1 National Insurance rules. The result provides an estimated annual and monthly take-home figure.
The calculator is designed as a planning tool for an engagement that is already being treated as inside the off-payroll working rules. It is not an employment-status test. Whether IR35 applies depends on the contractual relationship and the reality of how the work is performed, not simply the contractor's day rate or expected income.
What Does “Inside IR35” Mean?
The expression “inside IR35” is commonly used when the off-payroll working rules apply to an engagement. Broadly, the rules are intended to make sure that a person who provides services through an intermediary, usually their own limited company, pays broadly the same Income Tax and National Insurance as an employee would where the person would have been an employee if engaged directly.
Being inside IR35 for tax does not automatically make a contractor an employee of the client for employment-rights purposes. The tax rules and employment-law rights are separate issues. This is one reason a simple calculator should not be used to decide whether an engagement is inside or outside the rules.
For public authorities and medium or large private-sector clients, the client is generally responsible for determining the worker's employment status for tax. Where the engagement is inside the rules, the deemed employer or fee-payer normally operates PAYE, deducts employee National Insurance, and accounts for the relevant employer charges.
How This IR35 Calculator Works
The first step is estimating your annual contract income. The calculator multiplies the day rate by the number of billable days per week and the number of working weeks in the year.
You can then enter qualifying deductions that should be removed before calculating the deemed direct payment. This field should be used carefully. It is not intended as a general place to enter every expense paid by a personal service company. Only costs that qualify under the relevant deemed-payment rules should be included.
The calculator applies Income Tax and standard employee Class 1 National Insurance to that estimated deemed pay. The remaining amount is shown as estimated take-home pay. The calculation is annualised, so it will not always match an individual payslip penny for penny.
2026/27 Income Tax Rates Used
For the tax year running from 6 April 2026 to 5 April 2027, the standard Personal Allowance is £12,570. The allowance is gradually withdrawn when income exceeds £100,000 and is fully lost at £125,140.
For England, Wales and Northern Ireland, the calculator applies the standard 20% basic rate, 40% higher rate and 45% additional rate. The basic-rate taxable income band is £37,700. Above that amount, higher-rate tax applies until the additional-rate threshold is reached.
Scotland has separate Income Tax bands. For 2026/27, Scottish taxpayers can fall into starter, basic, intermediate, higher, advanced and top-rate bands. Selecting Scotland in the calculator uses those Scottish bands while the standard employee National Insurance calculation remains separate.
National Insurance Used by the Calculator
For a standard employee in 2026/27, employee Class 1 National Insurance is generally charged at 8% on earnings between the annual Primary Threshold of £12,570 and the Upper Earnings Limit of £50,270, then at 2% on earnings above the Upper Earnings Limit.
This page uses annual thresholds to provide a straightforward estimate. Actual payroll calculations are normally performed by pay period, and special National Insurance category letters or individual circumstances can produce a different result.
What Happens to Employer National Insurance?
Employer National Insurance is different from employee National Insurance. Under the modern off-payroll fee-payer rules covered by this calculator, the deemed employer is responsible for paying employer National Insurance. HMRC guidance states that employer National Insurance cannot be deducted from the deemed direct payment to the worker's intermediary.
For 2026/27, the standard employer Class 1 National Insurance rate is 15% above the annual Secondary Threshold of £5,000. The calculator displays an estimate of this employer cost separately so you can see it without reducing the worker's estimated deemed pay.
This distinction matters because some contractor calculators start with an umbrella-company assignment rate or an all-in hiring budget where employer costs have already been built into the quoted amount. That is a different starting point. This calculator assumes the day rate represents the amount payable to the intermediary before PAYE deductions under the fee-payer model, excluding VAT.
Small Private-Sector Clients Can Be Different
If the end client is a small organisation outside the public sector, responsibility for considering the off-payroll rules generally remains with the worker's intermediary. In that situation, the older deemed employment payment calculation can involve additional steps, including the treatment of employer National Insurance within the intermediary's calculation.
Because that process is not the same as the fee-payer model used for public authorities and medium or large private-sector clients, this calculator does not attempt to combine both methods into one result. Mixing them can make an apparently precise figure misleading.
Inside IR35 vs. Outside IR35
An inside-IR35 engagement is taxed through the relevant off-payroll mechanism as employment income for tax purposes. An outside-IR35 engagement is treated differently because the off-payroll employment tax rules do not apply to that engagement. A contractor operating through a limited company may then have company-level and personal tax considerations that are not part of this inside-IR35 estimate.
It can be tempting to compare an inside-IR35 take-home number directly with a salary or with limited-company dividends. Those comparisons need care. Contracting can involve unpaid holidays, gaps between projects, insurance, professional costs, pension planning, equipment, accounting fees and commercial risk. Employment can include benefits that are not visible in basic salary alone.
A useful comparison should therefore look at the complete financial picture rather than only the headline percentage retained after tax.
How Is IR35 Status Actually Determined?
IR35 status is not decided by income level. A £300-a-day contract is not automatically outside IR35, and a £1,000-a-day contract is not automatically inside. Employment status is based on the terms of the engagement and the actual working relationship.
Relevant factors can include control over the work, whether a genuine right of substitution exists, the obligations between the parties, financial risk, how integrated the worker is into the client's organisation, and other facts surrounding the engagement. No single monetary input on this calculator can answer those questions.
HMRC provides the Check Employment Status for Tax service, commonly called CEST, to help workers and organisations assess employment status for tax. The information supplied to a status assessment should reflect both the contract and what happens in practice.
What Is a Status Determination Statement?
Where the client is responsible for making the determination under the off-payroll rules, an inside or outside decision should normally be communicated through a Status Determination Statement, often shortened to SDS. The statement sets out the client's conclusion and the reasons for it.
The determination is engagement-specific. A contractor can have one contract that is inside the rules and another that is outside. Changes to working arrangements can also affect a previous conclusion, which is why status should not be treated as a permanent label attached to the individual contractor.
Why Your Actual Payslip May Be Different
This IR35 calculator works on an annual basis. Real PAYE is operated through payroll and can depend on a tax code, the pay frequency, amounts already earned earlier in the year, other employment, benefits and adjustments reported to HMRC.
National Insurance is also normally calculated for individual pay periods rather than by simply applying annual bands at the end of the year. Annualising the thresholds gives a useful planning estimate but can create small differences compared with payroll software.
The calculator also does not automatically deduct pension contributions, student loan or postgraduate loan repayments, umbrella-company margins, salary-sacrifice arrangements, benefits, child benefit charges, tax owed from earlier years or other personal deductions. Those items can materially affect cash received.
How to Use the IR35 Calculator
Enter the daily rate stated for the engagement, excluding VAT. Next, enter the average number of billable days you expect to work each week. Five days is a common starting point, but you can use a different value for part-time contracts.
Enter the number of working weeks you expect to invoice during the tax year. Contractors often use fewer than 52 weeks to allow for holidays, public holidays, sickness, training or gaps between projects. The correct number should reflect your own expected billable schedule.
Select the Income Tax region. Choose Scotland if Scottish Income Tax rates apply to you; otherwise use England, Wales or Northern Ireland. Add qualifying deductions only when you are confident they are allowed in arriving at the deemed direct payment.
Select Calculate IR35 Take-Home to see the annual contract value, estimated deemed pay, Income Tax, employee National Insurance, annual take-home, monthly equivalent, effective deduction rate, and separately calculated employer National Insurance.
Why the Day Rate Matters
A contract day rate is not the same as an employee's daily salary. A contractor usually invoices only for days actually worked, while an employee's annual salary may include paid holiday and other employment benefits. Contractors may also experience periods without billable work.
For that reason, multiplying a day rate by 260 working days can exaggerate expected annual income if the contractor does not actually bill for all 52 weeks. The working-weeks field lets you create a more realistic estimate based on your own schedule.
Important Limitations
This calculator is intended for general educational and planning purposes. It is not HMRC payroll software, an IR35 status determination, tax advice, legal advice, accounting advice or an employment-rights assessment.
Tax legislation can change, and the correct treatment of a contractor depends on facts that a generic calculator cannot know. Before relying on a figure for a contract negotiation, payroll decision or tax return, check the current HMRC guidance and consider professional advice where appropriate.