IR35 Take-Home Comparison Calculator

IR35 is tax legislation that determines whether a contractor is genuinely self-employed (outside IR35) or effectively an employee (inside IR35). If inside IR35, you pay similar taxes to an employee, significantly reducing take-home pay. The client/agency now determines your IR35 status for medium and large businesses.

Typically 20-30% less. On a £500/day rate over 220 days (£110,000), inside IR35 via an umbrella company might net around £65,000-70,000, while outside IR35 via a limited company could net £80,000-85,000. The exact difference depends on your rate and expenses.

Consider the rate premium, contract length, and your alternatives. Many contractors negotiate 15-25% higher day rates for inside IR35 to offset the tax difference. A good inside IR35 rate can sometimes be comparable to a lower outside IR35 rate.

An umbrella company employs contractors and handles payroll for inside IR35 contracts. They deduct their fee, employer NI, and process PAYE tax. While convenient, fees reduce your take-home pay further. Always check the umbrella's fee structure carefully.

Yes, you can request the client's reasoning and dispute it through their status disagreement process. HMRC's CEST tool can provide guidance, though it's not binding. Consider getting an independent IR35 review from a specialist.

Key factors include: right of substitution, control over how/when/where you work, mutuality of obligation, financial risk, provision of equipment, and integration into the client's organization. A genuinely self-employed contractor typically has more autonomy and business risk.