Contractor take-home, outside IR35.

Contractor Take-Home (Outside IR35)

For contractors trading through their own limited company outside IR35. Drag the sliders to model your day rate and how many days you'll bill, then we apply UK 2025/26 corp tax + dividend tax rules.

How contractor take-home actually works (outside IR35)

1. Day rate × billable days = company turnover. Most contractors bill 200-230 days a year after holiday, sick, training, and gaps between contracts.
2. Pay yourself a small salary (typically £12,570, the personal allowance). Salary is deductible for the company but attracts employer NI on the part above £5,000 at 15%.
3. Company pays Corporation Tax on remaining profit at 19% under £50K, 25% over £250K, marginal rate 26.5% in between.
4. Distribute the post-CT profit as dividends. £500 dividend allowance, then 8.75% basic, 33.75% higher, 39.35% additional rate.
5. Or contribute to a pension via the company. Up to £60K/year of employer pension contributions are deductible and bypass dividend tax entirely.

Worked example — £500/day, 220 billable days

• Day rate: £500
• Billable days: 220
• Annual revenue: £110,000
• Salary: £12,570 (full PA)
• Allowable expenses: £3,000 (accountant, software, travel)
• Employer NI: £1,135.50
• Corp tax (marginal rate hit): £20,973
• Available dividends: £72,321
• Dividend tax: £14,940
• Total take-home: £69,952 (about 65% of revenue, 34.6% effective rate)

Outside IR35 vs inside IR35

IR35 is HMRC's rule that decides whether you're really self-employed or a "deemed employee." If a contract falls inside IR35, the take-home is dramatically lower because the engager (or umbrella) pays employer NI out of your fee.

The status is determined by the engager (since April 2021 for medium and large clients in the private sector, and always for the public sector). You can disagree but the engager makes the call. Common factors that suggest outside IR35:

• You can substitute someone else to do the work
• You control how and when the work is done, not the client
• You take real financial risk (fixed-price work, your own equipment, your own insurance)
• You have multiple clients and aren't part of the client's team structure

If you're unsure about your status, get a Status Determination Statement from your client and an independent IR35 contract review. A specialist contractor accountant can do both.

Where Take Home helps

• Connects to your bookkeeping — FreeAgent, Xero, QuickBooks — so the calc uses your actual revenue and expenses, not estimates.
• Surfaces missed expenses: contractors typically under-claim by £500-2,000/year on home office, mileage, training, and equipment.
• Models pension vs dividends: above the basic-rate band, employer pension contributions almost always beat higher-rate dividends.
• Models 'should I split with my spouse?' if your spouse genuinely contributes to the company.
• Tracks the IR35 boundary across multiple contracts in a year.