Use our inside IR35 calculator to work out your deemed payment, estimated tax deductions and take-home pay if your contract is deemed inside IR35. This calculator is specifically designed for limited company contractors and should not be used for umbrella company income calculations.
If your contract is caught inside IR35, most of your limited company income may be treated as a deemed payment for tax purposes. This can significantly increase your Income Tax and National Insurance liability and reduce your overall take-home pay.
| Description | Amount £ |
|---|---|
| Annual Turnover (Contract Revenue) | £0.00 |
| Business Expenditure | |
| Annual Business Expenses | £0.00 |
| Pension Contributions | £0.00 |
| Gross Salary | £0.00 |
| Employer’s NIC (on Salary) | £0.00 |
| 5% Allowable Expenses (IR35) | £0.00 |
| Total Expenditure | £0.00 |
| Net Income Before Tax | £0.00 |
| Less: Additional Employer's NIC | £0.00 |
| Deemed Payment | £0.00 |
| Personal Tax Breakdown | |
| Total Taxable Income (Salary + Deemed) | £0.00 |
| PAYE (on Salary) | £0.00 |
| Employee NIC (on Salary) | £0.00 |
| Additional PAYE (on Deemed) | £0.00 |
| Additional Employee NIC (on Deemed) | £0.00 |
| Net Annual Income | £0.00 |
| Net Monthly Income | £0.00 |
Disclaimer: The inside IR35 Calculator is provided for guidance only and does not constitute legal, financial, or tax advice. Figures are estimates and may vary depending on your exact situation. For personalised planning, consult a qualified accountant or tax adviser familiar with contractor tax law and IR35 regulations.
Inside IR35 refers to a contract that is considered “disguised employment” for tax purposes. Although you may be working through a limited company, HMRC treats your income as if you were an employee.
This means your earnings are subject to PAYE income tax and National Insurance contributions, similar to a salaried role. As a result, the flexibility and tax efficiency typically associated with limited companies are significantly reduced.
When working inside IR35, your contract income is processed through a deemed salary calculation. This determines how much of your company’s income is treated as employment income.
In practical terms, your contract revenue is reduced by allowable costs and then taxed under PAYE rules. This includes both employee and employer National Insurance, as well as income tax based on your total earnings.
The deemed payment is a key part of inside IR35 calculations. It represents the portion of your contract income that is treated as salary.
The typical calculation flow is:
This deemed salary is then subject to PAYE income tax and employee National Insurance.
Inside IR35 contracts are generally less tax-efficient because income is taxed as employment income rather than dividends.
Key reasons include:
As a result, contractors working inside IR35 often see a noticeable reduction in their take-home pay compared to outside IR35 arrangements.
Understanding the difference between inside and outside IR35 is crucial for contractors.
| Scenario | Tax Treatment | Flexibility | Take-home Pay |
|---|---|---|---|
| Inside IR35 | PAYE (employment-style taxation) | Limited | Lower |
| Outside IR35 | Salary + dividends | High | Higher |
If you want to compare both scenarios side by side, you can use our IR35 comparison calculator to see the impact on your income.
Although options are more limited, there are still ways to improve your position:
Even small adjustments can make a meaningful difference to your overall net income.
For example, a contractor earning £500 per day, working 5 days per week for 44 weeks, would generate an annual turnover of approximately £110,000.
After deducting expenses, pension contributions, and employer’s National Insurance, the remaining income is treated as deemed salary and taxed accordingly.
This calculator reflects that process, helping you understand how each deduction impacts your final take-home pay.
This calculator provides a realistic estimate based on 2026/27 UK tax rules and commonly used contractor scenarios.
It assumes a standard working pattern and does not account for every individual circumstance, such as specific expense structures, tax code adjustments, or complex financial arrangements.
For tailored advice, it is always recommended to consult a qualified accountant.
The 5% flat rate allowance was historically available to cover administrative costs. However, under current IR35 rules, this allowance may not apply where the end client determines your IR35 status (which is the case for most medium and large organisations).
This calculator includes the allowance for illustration purposes, but actual applicability will depend on your specific engagement.
If you are deciding between contracts, it is important to understand the real financial impact.
👉 Use our Inside vs Outside IR35 calculator to compare both scenarios instantly and make a more informed decision.