Used in the outside-IR35 calculation and, where relevant, the Chapter 8 calculation
Choose which IR35 rules apply to the engagement
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Contractor insurance – including IR35 cover – from Qdos
Protect yourself against the cost of an IR35 investigation, and compare professional indemnity, public liability and employers’ liability cover for your limited company.
How does the calculator work?
The calculator takes your contract rate and the number of weeks you expect to work during the tax year.
It then compares:
- your estimated take-home pay when working outside IR35 through your limited company; and
- your estimated take-home pay if the same engagement is inside IR35 under Chapter 8 or Chapter 10.
For the outside-IR35 calculation, the calculator works out your company profit after business expenses, pension contributions and your annual salary. It then calculates your Corporation Tax liability and the amount remaining to be taken as dividends.
The inside-IR35 calculation depends on whether Chapter 8 or Chapter 10 applies (see below).
This calculator compares two limited-company scenarios. It does not model umbrella company employment. To compare outside IR35 via a limited company vs inside IR35 via an umbrella, use our main IR35 Calculator.
Chapter 8 – the original IR35 rules
Chapter 8 applies when responsibility for IR35 remains with the contractor’s limited company, if the end client is defined as a ‘small’ company in the private sector.
If the contract is inside IR35, the company must calculate a deemed employment payment and deduct and pay the appropriate PAYE tax and National Insurance to HMRC.
The calculator includes the statutory 5% expenses allowance when calculating the deemed payment. It also deducts salary already paid, employer National Insurance on that salary, and any IR35-deductible expenses you enter, before working out the deemed payment and the employer NI due on it.
You can also enter expenses which qualify for deduction when calculating the deemed payment. These are more restricted than normal company expenses, so not every Corporation Tax-deductible expense will qualify.
Find out more in HMRC’s step-by-step deemed employment payment guidance.
Chapter 10 – the off-payroll working rules
Chapter 10 generally applies when you work through your company for a public-sector organisation or a medium or large private-sector client.
The client is normally responsible for deciding your IR35 status and must explain its decision in a Status Determination Statement (SDS).
If the contract is inside IR35, the fee-payer deducts income tax and employee National Insurance from the deemed direct payment before paying your company.
Unlike Chapter 8, there is no 5% expenses allowance under Chapter 10.
Qualifying expenses can still be deducted when calculating the deemed direct payment. HMRC explains the calculation in its Employment Status Manual.
What about employer National Insurance under Chapter 10?
The calculator treats the rate you enter as the amount available to fund the inside-IR35 engagement.
That pot has to cover the deemed direct payment and employer National Insurance. The fee-payer then deducts income tax and employee NI from the deemed direct payment.
In law, employer NI is a liability of the deemed employer and is not a PAYE deduction from the worker. In this calculator it is still funded from the assignment rate, which is how many agencies and clients price inside-IR35 work.
Employer NI is shown in the breakdown so you can see the cost. It is not taken off take-home a second time.
If the client actually paid employer NI on top of your agreed rate, take-home would be higher than the figure shown.
For an umbrella calculation, use our umbrella company calculator.
What expenses should I include?
There are two expense fields because the expenses you can claim through your company aren’t necessarily the same as those you can use for an IR35 calculation.
Annual business expenses are used to work out your company profits outside IR35 and, where relevant, under Chapter 8.
IR35-deductible expenses are expenses you are allowed to deduct when working out the deemed payment.
Under Chapter 10, the expense rules are much tighter. In most cases, you can only deduct expenses you could have claimed if you had been employed directly by the client.
Under Chapter 8, IR35-deductible expenses cannot exceed the annual business expenses entered above. That stops the same cost being treated more generously in the deemed-payment calculation than in the company accounts.
Assumptions and notes
- The calculator uses 2026/27 Income Tax, National Insurance, Corporation Tax and dividend tax rates and thresholds.
- England, Wales and Northern Ireland use the main UK Income Tax rates. Scottish employment income uses the Scottish tax bands, while dividends use UK-wide rates.
- The Personal Allowance starts to fall once your income exceeds £100,000 and is lost completely at £125,140.
- Corporation Tax is calculated on the basis that your company has no other associated companies, so the full £50,000 and £250,000 profit thresholds apply.
- Your director’s salary is whatever you enter. The calculator does not try to find the most tax-efficient director’s salary for you.
- Employment Allowance is not included.
- Any company pension contribution you enter is treated as an employer contribution. Pension annual allowance, carry forward and other pension limits are not checked.
- Under Chapter 8, the 5% allowance is used only to calculate the deemed employment payment. It is not treated as a tax-free withdrawal. Employer National Insurance on salary already paid and on the deemed payment is included in the calculation. Any residual profit left in the company may still be taken as a dividend after Corporation Tax.
- Under Chapter 10, the contract income you enter is treated as an all-in rate. Employer NI is funded from that rate before income tax and employee NI are deducted from the deemed direct payment. Employer NI is shown in the breakdown so you can see the cost; it is not deducted from take-home again.
- There is no 5% allowance under Chapter 10. On the same rate, Chapter 8 take-home can therefore be a little higher than Chapter 10 because of that allowance, after Corporation Tax and dividend tax on any residual profit.
- The Apprenticeship Levy is not included. The levy only applies to employers with a sufficiently large annual pay bill, so it will not apply to every engagement.
- Student Loan and Postgraduate Loan repayments are estimates. If you receive dividends, further repayments may be due through Self Assessment.
- National Insurance is calculated annually for this estimate. Actual payroll figures may differ slightly because NI is normally calculated for each pay period.
- Other income is not included. Income from another job, investments or other sources could change the amount of tax you actually pay.
- VAT, benefits in kind, personal pension contributions and Gift Aid are not included.
- The inside rate needed to match outside shows the estimated inside-IR35 rate you would need to achieve the same take-home pay as the outside-IR35 calculation. That inside rate is also treated as all-in, including employer NI.
- This calculator is for contractors who continue to use their limited company under Chapter 8 or Chapter 10. To compare limited company income outside IR35 with umbrella income inside IR35, use our main IR35 Calculator.
- These figures are estimates. Your actual position will depend on your contracts, expenses, other income and individual circumstances.