2026/27 tax year
What does your day rate actually pay you?
On £500 a day inside IR35, working 5 days a week for 46 weeks through an umbrella, you take home about £68,105 a year, £5,675 a month, 59.2% of the £115,000 you invoice. The same rate outside IR35 through a limited company keeps roughly £72,293. Enter your rate to see your own breakdown.
Behind the numbers
- Inside IR35 (umbrella): the assignment rate first funds a £25/week umbrella margin, then employer National Insurance at 15% above £5,000/year and the 0.5% apprenticeship levy, leaving your gross pay (gov.uk: working through an umbrella company). Holiday pay is assumed rolled up into that gross, not skimmed from it.
- PAYE for 2026/27: personal allowance £12,570 (tapered £1 per £2 above £100,000), then 20% to £50,270, 40% to £125,140, 45% above; employee NI at 8% between £12,570 and £50,270 and 2% above (gov.uk: income tax rates). England/Wales/NI bands. Scottish rates differ.
- Outside IR35 (limited company): £12,570 director salary (with £1,135.50 employer NI, sole-director companies cannot claim the Employment Allowance, gov.uk), corporation tax at 19% to £50,000, an effective 26.5% marginal rate to £250,000, 25% above (gov.uk), and all remaining profit paid as dividends in the same year.
- Dividend tax uses the £500 allowance and rates of 10.75% / 35.75% / 39.35%, the rates in force for 2025/26 (gov.uk: tax on dividends). Confirm the current year's dividend rates before relying on the outside-IR35 comparison. The personal allowance taper is not modelled on dividend income, so outside-IR35 results above roughly £100,000 total income are optimistic by up to a few thousand pounds.
- Not modelled: pension contributions (the biggest lever, employer pension via umbrella or company escapes tax and NI entirely), student loans, VAT flat-rate gains, and expense claims inside IR35 (generally not allowed). Treat every figure as an estimate, a full payroll or accountant's calculation should land within a few hundred pounds.
Contractor Pay Calculator is an independent information site operated by Ellul Solutions Ltd. It is not affiliated with HMRC or any government body, and nothing here is tax, accounting or financial advice. Figures are estimates built on stated assumptions, confirm your own position with an accountant or your umbrella company before making decisions.
Day rate to take-home, inside vs outside IR35 (46 weeks, 5 days/week)
Last updated
Annual take-home at common day rates, computed with the calculator's exact formulas: umbrella employment costs then PAYE inside IR35; £12,570 salary, corporation tax and full dividend distribution outside.
Inside: (invoice − £1,150 umbrella margin) split into gross pay + 15% employer NI above £5,000 + 0.5% levy; PAYE with £12,570 tapered allowance, 20/40/45% bands, 8%/2% employee NI. Outside: £12,570 salary + £1,135.50 employer NI, corporation tax 19%/26.5% marginal/25%, remaining profit as dividends taxed at 10.75%/35.75%/39.35% after the £500 allowance (2025/26 dividend rates; allowance taper not applied to dividends).
| Day rate | Annual invoice | Inside IR35 take-home | Outside IR35 take-home | Inside keeps | Outside keeps |
|---|---|---|---|---|---|
| £300 | £69,000 | £45,006 | £50,570 | 65.2% | 73.3% |
| £400 | £92,000 | £56,556 | £61,432 | 61.5% | 66.8% |
| £500 | £115,000 | £68,105 | £72,293 | 59.2% | 62.9% |
| £600 | £138,000 | £75,650 | £83,155 | 54.8% | 60.3% |
| £700 | £161,000 | £84,853 | £94,016 | 52.7% | 58.4% |
- A £500/day contractor inside IR35 takes home about £68,105 a year through an umbrella (46 weeks), 59.2% of the £115,000 invoiced.
- At the same £500 rate, working outside IR35 through a limited company keeps roughly £72,293, £4,188 a year more than inside.
- Retention falls as rates rise: inside IR35 you keep 65.2% of a £300/day contract but only 52.7% of a £700/day one, largely because the personal allowance tapers away above £100,000.
Cite this page
“Day rate to take-home, inside vs outside IR35 (46 weeks, 5 days/week)”, Contractor Pay Calculator, https://contractorpaycalculator.co.uk/ (updated 2026-08-14). Inside: (invoice − £1,150 umbrella margin) split into gross pay + 15% employer NI above £5,000 + 0.5% levy; PAYE with £12,570 tapered allowance, 20/40/45% bands, 8%/2% employee NI. Outside: £12,570 salary + £1,135.50 employer NI, corporation tax 19%/26.5% marginal/25%, remaining profit as dividends taxed at 10.75%/35.75%/39.35% after the £500 allowance (2025/26 dividend rates; allowance taper not applied to dividends).
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Frequently asked
How much do you take home on £500 a day inside IR35?
About £68,105 a year through an umbrella, working 5 days a week for 46 weeks, £5,675 a month, or 59.2% of the £115,000 invoiced. The rest goes on the umbrella margin, employer NI, the levy, income tax and employee NI.
Why is my umbrella take-home so much lower than my rate suggests?
Because employer costs come out of the assignment rate before your gross pay exists: a £25/week margin, employer NI at 15% above £5,000, and the 0.5% apprenticeship levy. Only then do income tax and employee NI apply.
Is it better to be inside or outside IR35 for take-home pay?
Outside IR35 keeps more at every professional rate, about £4,188 a year more at £500/day, rising past £11,000 at £700/day. But status is determined by the working relationship, not preference.
What percentage of your day rate do you keep as a contractor?
Inside IR35 through an umbrella, roughly 53–65% depending on rate: 65.2% at £300/day, 59.2% at £500/day, 52.7% at £700/day. Outside IR35 through a limited company, roughly 60–75% over the same range.
Why does the calculator assume 46 working weeks?
It allows about 6 unbilled weeks for holiday, bank holidays and gaps between contracts, a realistic default for a full-time contractor. Change it: every week off costs a £500/day contractor £2,500 of invoicing.
How accurate is this calculator?
It is an estimate built on published HMRC rates with stated simplifications (no pension, no student loan, rUK bands, dividend rates as at 2025/26). A full payroll or accountant's calculation should land within a few hundred pounds of these figures.
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