Outside IR35 Take-Home Pay Calculator
Enter your day rate, billable days and a tax-efficient director salary to see what you keep through a limited company on an outside-IR35 contract for the 2026/27 tax year.
Outside IR35 Take-Home Pay Calculator
Enter your day rate, billable days and a tax-efficient director salary to see what you keep through a limited company on an outside-IR35 contract for the 2026/27 tax year.
Your billed day rate, excluding VAT. Turnover is this multiplied by your billable days.
A full-time contractor typically bills around 220 to 240 days a year after holiday, illness and gaps between contracts.
Two common 2026/27 salary targets for a single-director company. There is no single universal optimum; the right figure depends on your circumstances.
Genuine wholly-and-exclusively business costs (accountancy, insurance, equipment, software, business travel). These reduce taxable profit. Pension contributions are not included here.
Single-director company assumption (no Employment Allowance, which a sole director cannot claim for 2026/27), with all post-tax profit drawn as dividends and no retained reserves. Dividend tax uses the 2026/27 rates of 10.75% (basic), 35.75% (higher) and 39.35% (additional) after the £500 dividend allowance. An employer pension contribution would lower the corporation tax and shift more value into your pension tax-free, so this take-home figure is not the same as the most tax-efficient plan.
Confirm your figure with a contractor specialist
Estimates get you close. A specialist confirms your exact position, the most tax-efficient salary, dividend and pension split, and your IR35 status. No obligation, and we reply within one working day.
How outside-IR35 take-home pay works for 2026/27
On a genuinely outside-IR35 contract you bill the client through your own limited company (a personal service company, or PSC), and you decide how to extract the profit. The standard route is a small director salary plus dividends. The salary is a deductible company expense, so it reduces the profit charged to corporation tax, while dividends are paid from post-corporation-tax profit and carry no National Insurance. The headline take-home above is your salary plus dividends, after the company has paid corporation tax and you have paid your personal income tax and dividend tax for 2026/27.
The figures here use the locked 2026/27 rates. Corporation tax is 19% on profits up to £50,000, 25% above £250,000, and an effective marginal rate of about 26.5% in between (marginal relief, standard fraction 3/200). Employer National Insurance is 15% on salary above the £5,000 secondary threshold, and a single-director company cannot claim the £10,500 Employment Allowance, which is why a low salary is common. Dividends are taxed at 10.75%, 35.75% and 39.35% across the basic, higher and additional bands after the £500 dividend allowance, rates that rose from 8.75% and 33.75% on 6 April 2026 under Finance Act 2026.
Two things this calculator deliberately does not do. First, it assumes you draw every available pound as a dividend in the year; in practice an employer pension contribution is the contractor's single biggest tax-efficient lever, because it is deductible against corporation tax, carries no NIC and is not taxed on you as income (subject to the £60,000 annual allowance). Second, it does not model VAT or the personal-allowance taper above £100,000. Treat the result as a realistic estimate of cash retention on an outside-IR35 engagement, then have the salary, dividend and pension split tailored to your actual position.
Frequently asked questions
What does outside IR35 actually mean for my take-home?
Outside IR35 means the engagement is genuinely a business-to-business contract, not disguised employment, so you can be paid gross by your company and extract profit through a tax-efficient mix of salary and dividends. That is why an outside-IR35 contractor typically keeps noticeably more than an equivalent inside-IR35 or umbrella worker on the same rate: dividends carry no National Insurance and the company pays corporation tax rather than full PAYE. The status must be genuine and supported by your working practices, not just a label on the contract.
Why is £12,570 or £6,708 the usual director salary for 2026/27?
For a single-director company that cannot claim the Employment Allowance, a salary between the £5,000 secondary threshold and the £6,708 lower earnings limit keeps employer NIC low while a salary at the £6,708 LEL still secures a qualifying year for the state pension. Taking £12,570 (the personal allowance and primary threshold) costs a little employer NIC on the slice above £5,000 but saves corporation tax on the extra salary, so for 2026/27 it can still come out marginally ahead. There is no single universal optimum, which is why this tool lets you compare both.
How is corporation tax worked out in this calculator?
Corporation tax for the 2026/27 financial year is 19% on profits up to £50,000 and 25% on profits above £250,000, with marginal relief (standard fraction 3/200) producing an effective rate of roughly 26.5% on profits between those limits. The £50,000 and £250,000 limits are divided by the number of associated companies, so if you or a connected person controls more than one company the bands shrink. This calculator assumes a single company with no associates.
Does this include a pension contribution or VAT?
No. The take-home figure assumes all post-tax profit is drawn as dividends, with no employer pension contribution and no VAT modelling. An employer pension contribution is usually the most tax-efficient extraction route for 2026/27 because it is deductible against corporation tax, carries no NIC and is not taxed on you as income, within the £60,000 annual allowance (plus any carry-forward). Adding one would reduce the dividends shown but increase your overall after-tax wealth, so the most tax-efficient plan is not the same as the highest cash take-home.
Are these the correct 2026/27 tax figures?
Yes. The calculator uses the locked 2026/27 rates: personal allowance £12,570, basic-rate income tax 20% to £50,270, dividend allowance £500, dividend rates 10.75% / 35.75% / 39.35%, employer NIC 15% above the £5,000 secondary threshold, employee NIC 8% then 2%, and corporation tax 19% / 25% with 3/200 marginal relief. These reflect the position for the year 6 April 2026 to 5 April 2027 following Finance Act 2026, which raised the dividend ordinary and upper rates from 6 April 2026.
Want to be sure of your position?
A calculator gives you the shape of the answer. We confirm your exact figure, your IR35 status and the reliefs that apply to you. Tell us about your situation for a no-obligation review.