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IR35 guide and contractor take-home comparison
The off-payroll rules (IR35) make a worker pay broadly the same Income Tax and National Insurance as an employee would when they provide services through their own intermediary, usually a personal service company. This page explains the rules and compares take-home pay on the same day rate, in money only.
- Free, no sign-up for the result
- Sources on GOV.UK
Rates last checked 15 October 2026 against GOV.UK
Rates for the 2026/27 tax year from GOV.UK. Check HMRC guidance for your circumstances.
Who decides employment status for tax?
- Medium and large clients, and the public sector: the client decides.
- Small clients outside the public sector: the worker's own intermediary decides.
Read HMRC's guide to the off-payroll rules for the detail, and use CEST for a view on an engagement.
Compare take-home pay on the same day rate
Off (the default): for a medium or large client, employer NI on a deemed payment cannot be deducted from your fee (GOV.UK ESM Chapter 10), so the client pays it on top and your gross pay is the whole fee. On: the fee is the client's full cost, so employer NI is taken out of it and the rest is your gross pay.
Assumptions: 2026/27 rates; 220 working days; a £12,570 company salary (the personal allowance); no company costs; no Employment Allowance, pension, student loan, other income or Apprenticeship Levy. On the PAYE side the client pays employer NI on top of the fee unless you tick the box above. Scottish bands apply to salary only; dividend rates are UK-wide.
| Same day rate | Employee through PAYE | Through your own company |
|---|---|---|
| Annual fee (day rate x days) | £110,000.00 | £110,000.00 |
| Company costs | £0.00 | £0.00 |
| Employer NI (paid by the client on top, or by the company) | £15,750.00 | £1,135.50 |
| Salary | £110,000.00 | £12,570.00 |
| Corporation Tax | £0.00 | £21,768.04 |
| Dividends paid | £0.00 | £74,526.46 |
| Income tax on salary | £33,432.00 | £0.00 |
| Employee NI | £4,210.60 | £0.00 |
| Dividend tax | £0.00 | £17,164.46 |
| Net take-home a year | £72,357.40 | £69,932.00 |
| Net take-home a month | £6,029.78 | £5,827.67 |
The company figure is £2,425.40 a year (£202.12 a month) lower than the PAYE figure. This compares money only. It does not say which treatment applies to you.
How the comparison works
- Employee through PAYE. The annual fee (day rate × days) is treated as employment income. By default the whole fee is gross pay for income tax and employee NI, because a medium or large client pays employer NI (15% above £5,000) on top and cannot deduct it from the fee. Tick the box if your rate has to cover employer NI (small client or umbrella) and it is taken out of the fee first. Gross pay is taxed as in the take-home pay calculator.
- Through your own company. Company profit is the fee less company costs. A salary comes off first, then Corporation Tax, and the rest is paid out as dividends, as in the salary vs dividend calculator.
- Assumptions. 220 working days, a £12,570 company salary, no company costs, no VAT in the day rate, a 12-month period, no Employment Allowance, pension, student loan or other income.
- Money only. The comparison does not say which treatment applies to any engagement.
This is an illustration for general information, not tax or financial advice. Accounter does not determine employment status. Use HMRC's Check Employment Status for Tax (CEST) tool or take professional advice.
Sources
- GOV.UK: Understanding off-payroll working (IR35)
- GOV.UK: Check employment status for tax (CEST)
- GOV.UK: Rates and thresholds for employers 2026 to 2027
- GOV.UK: Income Tax in Scotland
- GOV.UK: Corporation Tax rates and allowances
- GOV.UK: Tax on dividends
Last checked 15 October 2026.