About this calculator
IR35 Comparison Calculator — PAYE vs umbrella vs limited company
Our IR35 Comparison Calculator puts the three most common UK contracting structures side by side: agency PAYE, umbrella company, and outside IR35 limited company. Enter a single day rate and instantly see annual gross income, total deductions and net take-home pay under each route for the 2025/26 tax year.
It is built for contractors deciding how to operate, recruiters and agencies advising candidates, and end clients producing comparable offers under the off-payroll working rules. It is especially useful when an assignment could be either inside or outside IR35 and you need to quantify the financial impact.
Each column shares the same engine. PAYE and umbrella apply Income Tax (20%, 40%, 45%) and Class 1 NI (8% / 2%) to your assignment rate, with the umbrella also deducting employer NI, the 0.5% apprenticeship levy and a weekly margin. The limited company route models a tax-efficient salary, dividends taxed at 8.75%, 33.75% and 39.35%, and corporation tax at 19% / 25% with marginal relief. All figures are estimates intended for guidance only and do not constitute tax or financial advice.
Money Tools UK
IR35 Comparison Calculator
Compare PAYE, umbrella company and outside IR35 limited company take-home pay for UK contractors.
Between 1 and 52 weeks.
Annual allowable business expenses (Ltd company only).
1257L is the standard UK personal allowance tax code.
PAYE
£72,072
£6,006 / month
Umbrella
£65,228
£5,436 / month
Outside IR35 Ltd
£68,028
£5,669 / month
In this scenario, PAYE employment produces the highest estimated take-home pay due to lower administrative and company-related costs.
Side-by-side comparison
Assumes £115,000 annualised contract income before taxes and deductions.
| Metric | PAYE | Umbrella | Outside IR35 Ltd |
|---|---|---|---|
| Annual gross income | £115,000 | £115,000 | £115,000 |
| Annual take-home | £72,072 | £65,228 | £68,028 |
| Monthly take-home | £6,006 | £5,436 | £5,669 |
| Taxes paid | £32,982 | £25,136 | £33,886 |
| NI paid (employee + employer) | £4,196 | £18,525 | £1,136 |
| Pension | £5,750 | £4,961 | £5,750 |
| Student loan | £0 | £0 | £0 |
| Business costs | £0 | £1,150 | £6,200 |
| Effective retention % | 62.7% | 56.7% | 59.2% |
| Estimated retained company profit | £0 | £0 | £0 |
VAT collected from clients is not treated as personal income or take-home pay.
Ltd company assumes a director salary of £12,570, dividends fully extracted, and tax code 1257L. 2025/26 thresholds.
Advanced contractor optimisation features (retained profit strategies, advanced VAT modelling and detailed tax code handling) are planned for a future update.
IR35 FAQs
Related tools
These estimates are simplified illustrations based on current UK tax assumptions and should not be treated as personal tax, payroll or financial advice. IR35 status and contractor taxation can vary depending on legislation and personal circumstances.
At-a-glance comparison
How the main UK contracting routes compare
Tax, take-home pay, admin, pensions and expenses across PAYE, umbrella and limited company — plus the practical differences between inside and outside IR35 engagements.
PAYE vs Umbrella vs Limited Company
A side-by-side view of the three main UK contracting structures for the 2025/26 tax year.
| Factor | Agency PAYE Employee of the agency | Umbrella Company Inside IR35 default | Limited Company Outside IR35 |
|---|---|---|---|
| Tax treatment | PAYE Income Tax + employee NI on full assignment rate. | PAYE + employee & employer NI + apprenticeship levy + margin. | Salary up to NI threshold + dividends; corporation tax 19–25%. |
| Typical take-home | ≈ 60–68% of assignment rate after PAYE & NI. | ≈ 55–65% after employer costs and umbrella margin. | ≈ 75–82% on a typical £500/day contract outside IR35. |
| Admin burden | None — agency runs payroll, you receive a payslip. | Minimal — submit timesheet, umbrella handles payroll. | Higher — bookkeeping, VAT, payroll, annual accounts, CT600. |
| Pension flexibility | Auto-enrolment workplace pension at statutory minimums. | Salary sacrifice usually available — efficient employer contributions. | Fully flexible — employer contributions up to £60k annual allowance. |
| Expense treatment | No business expenses claimable against agency income. | Limited; SDC rules generally block travel & subsistence. | Wholly & exclusively business expenses fully deductible. |
| Best for | Short bookings or contractors who want zero admin. | Inside IR35 engagements and short-term contracts. | Outside IR35, longer engagements, higher day rates. |
Tax treatment
Agency PAYE
Umbrella Company
Limited Company
Typical take-home
Agency PAYE
Umbrella Company
Limited Company
Admin burden
Agency PAYE
Umbrella Company
Limited Company
Pension flexibility
Agency PAYE
Umbrella Company
Limited Company
Expense treatment
Agency PAYE
Umbrella Company
Limited Company
Best for
Agency PAYE
Umbrella Company
Limited Company
Inside IR35 vs Outside IR35
How the off-payroll working rules change tax, take-home pay and day-to-day admin.
| Factor | Inside IR35 Taxed as employment | Outside IR35 Genuine business-to-business |
|---|---|---|
| Tax treatment | Full PAYE Income Tax + Class 1 NI on deemed employment income. | Tax-efficient salary + dividends through your limited company. |
| Take-home pay | Lower — typically 55–65% via umbrella, no salary/dividend split. | Higher — typically 75–82% net retention after corporation & personal tax. |
| Who decides status | Public sector & medium/large private clients issue a Status Determination Statement (SDS). | Same SDS process; small private clients leave the determination to the contractor. |
| Admin burden | Low — umbrella runs payroll; little for you to manage. | Higher — limited company filings, VAT and IR35 evidence to retain. |
| Pension flexibility | Salary sacrifice via umbrella — efficient but capped by assignment rate. | Employer contributions from the company up to £60k annual allowance. |
| Expense treatment | SDC rules typically block travel, subsistence and home-office claims. | Genuine business expenses (travel, equipment, software) fully deductible. |
| Risk profile | Low — status agreed up front, deductions handled by fee-payer. | Status must hold up to HMRC review; keep a contract & working-practices review. |
Tax treatment
Inside IR35
Outside IR35
Take-home pay
Inside IR35
Outside IR35
Who decides status
Inside IR35
Outside IR35
Admin burden
Inside IR35
Outside IR35
Pension flexibility
Inside IR35
Outside IR35
Expense treatment
Inside IR35
Outside IR35
Risk profile
Inside IR35
Outside IR35
Estimates for the 2025/26 UK tax year using HMRC thresholds. Individual circumstances vary — always confirm with a qualified accountant.
Trust & transparency
Why trust these calculations?
How Money Tools UK keeps every calculator accurate, current and transparent.
UK tax year 2025/26
Calculations use the current UK tax year bands, allowances and thresholds for England, Wales and Northern Ireland.
HMRC-aligned thresholds
Personal allowance, NI primary/upper limits, dividend bands, corporation tax and SDLT bands follow published HMRC rates.
Regularly updated
Rates are reviewed each Budget and Autumn Statement, then refreshed across every calculator on this site.
Transparent assumptions
Each tool documents its inputs, formulas and edge cases — no hidden fudge factors or marketing-led numbers.
Educational purpose
Results are estimates for guidance and learning only and are not personal tax, legal or financial advice.