The IR35 Calculator — Inside vs Outside vs Permanent
IR35 determines whether a contractor working through a limited company is treated as self-employed (outside IR35) or as a deemed employee (inside IR35) for tax purposes. The difference in take-home pay is typically thousands of pounds per year. This tool shows the exact impact at your day rate.
How to use
Set your day rate and working days per year. The tool calculates your take-home income under three scenarios: outside IR35 (limited company with salary plus dividends), inside IR35 (deemed employment with 5% expense allowance), and as a permanent employee on the same gross income.
Frequently Asked Questions
Who decides IR35 status?
For private sector engagements, the end client is responsible for determining IR35 status (since April 2021). For public sector, this has applied since April 2017. The contractor can challenge the determination but the client makes the initial decision. HMRC provides the CEST (Check Employment Status for Tax) tool.
What is the 5% flat rate deduction?
Contractors caught inside IR35 can deduct 5% of their gross income as a flat rate expense allowance before calculating deemed employment income. This partially offsets the higher tax but does not come close to eliminating the difference.
Can I choose to be outside IR35?
No. IR35 status is determined by the nature of the working relationship, not by the contract wording or the contractor's preference. Key factors include control, substitution rights, mutuality of obligation, and whether the contractor is part and parcel of the client organisation.
Does the permanent employee column include benefits?
No. The permanent column shows tax on the same gross income as a salary only. A permanent employee would typically also receive holiday pay, sick pay, pension contributions, and potentially other benefits. The true comparison is more nuanced than tax alone.
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Book a Free Discovery Call© Imperial Consulting Limited, trading as Grosvenor.Solutions. This tool is for illustrative and educational purposes only. It is not tax advice. Your circumstances may differ. Always consult a qualified professional before making tax decisions. Calculated using 2026/27 HMRC published rates for England, Wales and Northern Ireland.