UK IR35 Take-Home Comparison

Outside IR35: salary + dividends, CT efficient. Inside: deemed employee, full PAYE + NI. Difference can be 15-20% of revenue.

Updated May 2026, using HMRC 2026/27 rates and current ONS / gov.uk figures.

IR35 (off-payroll working) tests whether a contractor is genuinely self-employed or 'disguised employment'. Inside IR35 means PAYE + employee NI on revenue; outside allows the limited-company / dividend route. Always seek qualified accountant advice for your specific arrangement.

Worked examples

£500/day, 220 days/yr (£110k revenue):

Outside IR35: ~£77k take-home (after CT and dividend tax)

Inside IR35: ~£68k take-home (PAYE + NI on full revenue)

Difference: ~£9k/yr or 8% of revenue.

Sources: HMRC IR35 / off-payroll guidance · retrieved 2026-05-12.

Frequently asked questions

Who decides IR35 status?

Since 2021, medium/large private-sector clients (and all public-sector) decide and bear the liability. Small companies and personal services to individuals: contractor still decides.

What's the test?

Mutual obligation, control, and personal-service substitution — the three main HMRC tests. CEST is HMRC's online tool.

Is contracting still worthwhile?

Often yes outside IR35; marginal inside. Speak to a qualified accountant who specialises in contractor accounts.