IR35 Calculator — Inside vs Outside
How it works
IR35 (off-payroll working) decides whether a contractor working through their own limited company is genuinely in business or a "disguised employee". Outside IR35: you control your tax setup. Inside: the fee-payer must deduct PAYE Income Tax and NI before paying your company, eliminating most tax efficiency.
Worked example
£500/day × 220 days = £110,000.
- Outside IR35: ~£82,000 take home (74%)
- Inside IR35: ~£68,000 take home (62%)
- ~£14,000 difference per year
Who should use this
- •Limited company contractors (PSCs)
- •Anyone offered an inside-IR35 contract
- •Recruiters comparing contract structures
- •Contractors negotiating rate uplifts
Common mistakes
- ×Assuming a CEST 'outside' result is bulletproof (it's not legally binding)
- ×Forgetting umbrella companies pass on Employer NI to the contractor
- ×Ignoring expenses being disallowed inside IR35
- ×Continuing 'outside' working arrangements after being deemed 'inside'
Frequently asked questions
Who decides IR35 status?▾
Since April 2021, the end client decides for medium/large private sector and all public sector. Small companies still leave it to the contractor's PSC.
What is CEST?▾
HMRC's Check Employment Status for Tax tool. It's not always conclusive and is widely criticised, but using it shows reasonable care.
Can I claim expenses inside IR35?▾
Generally no — the 5% expenses allowance was scrapped in 2017 for public sector and 2021 for private. Limited claims for genuine subsistence/travel only.
What's the difference between inside IR35 and umbrella?▾
Inside IR35 = your PSC receives net pay after PAYE. Umbrella = you become an employee of the umbrella, who deducts PAYE (and usually employer NI from your rate).
Can HMRC investigate retrospectively?▾
Yes — typically up to 4 years (6 if careless, 20 if deliberate). Status determinations can be challenged years later.
What rate uplift compensates for inside IR35?▾
Typically 20–25% on day rate to maintain similar take-home, depending on level.