IR35 inside vs outside take-home.

Contractors face IR35 status determination: Outside IR35 = effectively self-employed (limited company, lower tax). Inside IR35 = treated as employee for tax purposes (much higher take). Outside take-home: ~78% of gross via Ltd company (corporation tax + dividends). Inside take-home: ~65% of gross (taxed as employment).

500/day × 220 days = 110k gross. Outside IR35 take-home: ~85,800. Inside IR35: ~71,500. Difference 14,300/year - meaningful. To match outside IR35 take-home inside, day rate needs to rise from 500 to 600+ (20% premium).

IR35 rules tightened 2017 (public sector) and 2021 (private sector). Client now determines status, not contractor. Many clients default to inside to avoid risk. Genuinely Outside roles require: substitution rights, control over how/when work done, financial risk, multiple concurrent clients. Get IR35 status review before each contract - QDOS and IR35 Shield offer paid assessments.

Quick example

With day rate of 500 and days per year of 220 (plus annual expenses of 0), the result is 14,300.00. Change any figure and watch the output shift — it's often more useful to see the pattern than to memorise the formula.

Which inputs matter most

You enter Day Rate, Days per Year, and Annual Expenses. Not every input has equal weight. Flip one at a time toward extreme values to feel which ones move the needle most for your situation.

What's happening under the hood

Gross = day rate × days. Outside IR35 take ≈ 78% of gross (Ltd co structure). Inside IR35 take ≈ 65% (employment tax). The formula is listed in full below. If the number looks off, you can retrace the calculation by hand — that's the point of showing the working.

What the headline number hides

Gross pay, net pay, and what actually lands in your account can differ by thousands depending on tax code, benefits, pension contributions, and student loan deductions. This tool isolates one piece of that picture — always pair it with a take-home calculator for the full view.

What this doesn't capture

Tax bands, pension contributions, student-loan deductions, and benefits-in-kind sit outside this calculation. The figure is the headline; your actual position depends on local tax rules and personal circumstances. Pair with a dedicated take-home calculator for the full picture.