What is IR35 in the UK?

IR35 is UK legislation designed to tax contractors who work like employees but operate through their own limited company. If caught by IR35 (inside), you pay tax and NI as an employee. If outside, you pay lower tax as a business. The rules apply to private and public sector engagements.

What is the difference between inside and outside IR35?

Inside IR35: You're treated as an employee for tax purposes - pay PAYE income tax, Employee NI (8-45%), and Employer NI (13.8%). Outside IR35: You're treated as a business - pay Corporation Tax (25%) and dividend tax (8.75-39.35%). Outside IR35 is typically 20-30% more tax-efficient.

How do I check if I'm inside or outside IR35?

HMRC uses three tests: Control (does client control how you work?), Substitution (can you send a substitute?), Mutuality of Obligation (is there ongoing work?). Most contractors who pass these tests are outside IR35. Use our IR35 calculator for an initial assessment.

What is the tax difference between inside and outside IR35?

A £50,000 annual contract inside IR35 pays approximately £11,000 in tax/NI, leaving £39,000 net. Outside IR35 pays approximately £7,000 corporation tax, with dividends taxed at 8.75%, leaving £43,000 net. Outside IR35 is typically £4,000-£8,000 more tax-efficient per year.

IR35 Calculator UK - Inside vs Outside IR35 Status Checker

Contract Value	Inside IR35 (Net)	Outside IR35 (Net)	Difference
£30,000	£24,000	£26,500	+£2,500
£50,000	£39,000	£43,000	+£4,000
£75,000	£56,000	£62,000	+£6,000
£100,000	£72,000	£80,000	+£8,000
£150,000	£102,000	£115,000	+£13,000

📝 Complete Guide to IR35 in the UK

This IR35 calculator UK helps you understand your tax status and the financial implications of being inside or outside IR35. IR35 is UK legislation designed to prevent tax avoidance by contractors working through limited companies.

💰 What is IR35?

IR35 (Intermediaries Legislation) applies when a contractor works through an intermediary (usually a limited company) but would be considered an employee if the intermediary didn't exist. The rules determine whether you pay tax as an employee (inside IR35) or as a business (outside IR35).

📊 The Three Key Tests

HMRC uses three main tests to determine IR35 status:

Control: Does the client control how, when, and where you work?
Substitution: Can you send a substitute to do the work?
Mutuality of Obligation (MOO): Is there an obligation for you to accept work and for the client to offer work?

📈 Inside vs Outside IR35 Tax Comparison

Inside IR35: Pay Income Tax (20-45%), Employee NI (8%), Employer NI (13.8%) - higher tax burden
Outside IR35: Pay Corporation Tax (19-25%), Dividend Tax (8.75-39.35%) - lower tax burden
£50,000 example: Inside = £39,000 net, Outside = £43,000 net (4,000 better)
£100,000 example: Inside = £72,000 net, Outside = £80,000 net (8,000 better)

⚡ UK IR35 Statistics (2026)

60% of contractors are outside IR35
30% inside IR35, 10% uncertain
Average tax saving outside IR35: £4,000-£8,000/year
Most affected sectors: IT, Finance, Consulting
IR35 rules apply to private and public sector

💡 How to Determine Your IR35 Status

Use This Calculator: Get an initial indication
Check Your Contract: Look for control, substitution, MOO clauses
Get Professional Advice: Consult a tax specialist
Use CEST Tool: HMRC's Check Employment Status for Tax tool
Review Regularly: Status can change with each contract

⚠️ Important IR35 Rules

Off-Payroll Rules: Since 2021, responsibility falls on the end-client for medium/large businesses
Status Determination Statement: Client must provide SDS
Disagreement Process: You can challenge the client's determination
Penalties: HMRC can impose penalties for incorrect status
Retrospective: HMRC can review past contracts (up to 6 years)

IR35 Calculator UK

📊 IR35 Assessment Questions

📊 IR35 Analysis

📊 Inside vs Outside IR35 Comparison