Contractor Calculator

Compare Your Take-Home Pay Across Structures

Enter your day rate or annual salary to instantly compare your take-home pay across PAYE, Limited Company (inside and outside IR35), and Sole Trader. See which structure puts the most money in your pocket.

£
Estimated Annual Gross: £79,450.00 (£350/day × 227 days)
227 billable days (260 weekdays − 8 bank holidays − 25 leave)
£

Salary taken from your Ltd company (rest as dividends)

£

Annual: £0.00 · Outside IR35: employer pension · PAYE: salary sacrifice

Adjust Working Days
?
Tax Year N/A

Your Take-Home Pay Comparison

How is this calculated?

Day Rate to Annual Gross: Your day rate is multiplied by your billable days per year. By default, billable days = 260 weekdays − 8 bank holidays − 25 days annual leave = 227 days. You can adjust these in the "Adjust Working Days" section, or switch to a fixed monthly schedule.

PAYE / Umbrella: Your gross income is taxed at Income Tax rates (20% basic, 40% higher, 45% additional) after deducting the Personal Allowance (£12,570). National Insurance is charged at 8% on earnings between £12,570 and £50,270, then 2% above that.

Sole Trader: Similar to PAYE for Income Tax, but you pay Class 4 NI instead: 6% on profits between £12,570 and £50,270, then 2% above. This makes sole trading slightly more tax-efficient than PAYE for NI purposes.

Limited Company (Outside IR35): Your company pays you a salary (triggering employer NI at 15% above £5,000). The remaining profit is subject to Corporation Tax (19% up to £50,000, with marginal relief up to £250,000, and 25% above). After-tax profit is paid as dividends, taxed at 8.75% (basic), 33.75% (higher), or 39.35% (additional) after a £500 tax-free allowance.

Limited Company (Inside IR35): Your contract income is treated as deemed employment. A 5% expense allowance is deducted first. Employer NI (15% above £5,000) is then deducted from the remaining amount. You pay Income Tax and employee NI on the rest — similar to PAYE but with the 5% allowance.

Pension contributions: Outside IR35, employer pension contributions reduce taxable company profit before Corporation Tax — they are not subject to Income Tax or NI. Inside IR35 and PAYE, pension works as salary sacrifice, reducing gross income before Income Tax and National Insurance. For sole traders, pension contributions reduce taxable profits.

Scottish Income Tax: Scottish residents pay different Income Tax rates on earned income (not dividends). Scotland has 6 bands from 19% (starter) to 48% (top rate), which typically means higher tax above ~£28,850 compared to England/Wales/NI.

Personal Allowance taper: If your income exceeds £100,000, the Personal Allowance reduces by £1 for every £2 above £100,000, reaching zero at £125,140.

How have these tax rates changed?
April 2026
Dividend tax rates increase by 2%
Basic rate: 8.75% → 10.75%. Higher rate: 33.75% → 35.75%. Additional rate unchanged at 39.35%.
Source: Autumn Budget 2025 →
April 2026
Scottish income tax bands widened
Starter rate band upper limit: £15,397 → £16,537. Basic rate band upper limit: £27,491 → £29,526.
Source: Scottish Government Budget 2026/27 →
April 2025
Employer NI increases, threshold drops
Employer NI rate: 13.8% → 15%. Secondary threshold: £9,100 → £5,000. Employment Allowance increased to £10,500.
Source: Autumn Budget 2024 →
April 2024
Employee NI cut to 8%
Main rate reduced from 10% to 8% (second cut in 6 months).
Source: Spring Budget 2024 →
January 2024
Employee NI cut to 10%
Main rate reduced from 12% to 10%.
Source: Autumn Statement 2023 →
April 2024
Dividend allowance halved again
Reduced from £1,000 to £500.
Source: Autumn Statement 2022 →
April 2023
Corporation Tax rises to 25%
Main rate increased from 19% to 25% for profits over £250,000. Small profits rate of 19% retained for profits under £50,000. Marginal relief introduced for profits between £50,000 and £250,000.
Source: Spring Budget 2021 →
April 2023
Dividend allowance halved
Reduced from £2,000 to £1,000.
Source: Autumn Statement 2022 →
April 2022
Dividend tax rates increased
Basic: 7.5% → 8.75%. Higher: 32.5% → 33.75%. Additional: 38.1% → 39.35%.
Source: Autumn Budget 2021 →
April 2022
Personal Allowance and thresholds frozen
Personal Allowance frozen at £12,570. Higher rate threshold frozen at £50,270. Originally frozen until 2026, now extended to 2031.
Source: Spring Budget 2021 →

Know your structure? Plan your month-by-month income →

Not sure about your IR35 status? Use our IR35 Status Estimator to get an indication. Once you know your take-home pay, use our Day Rate Calculator to find the daily rate you need to charge. If you run a limited company outside IR35, our Dividend vs Salary Calculator can help you find the optimal split.

Frequently Asked Questions

Is it better to be a sole trader or limited company in the UK?

For most UK contractors earning over £30,000-£40,000 who are outside IR35, a limited company structure is more tax-efficient. However, if you are inside IR35, the tax advantages largely disappear and the additional admin costs of a limited company may not be worthwhile. Use the calculator above to compare your specific situation.

How much more will I take home through a limited company?

At typical contractor income levels (£50,000-£150,000), a limited company outside IR35 can save you 10-20% compared to PAYE. For example, on £100,000 gross, a Ltd director taking a £12,570 salary with dividends might take home around £75,000-£78,000, compared to £65,000-£67,000 via PAYE. The exact difference depends on your income level and salary/dividend split. Use the calculator above for a precise comparison.

What is the difference between inside and outside IR35 for take-home pay?

Outside IR35, you can operate through a limited company, taking a low salary and the rest as dividends — the most tax-efficient structure. Inside IR35, your income is treated as deemed employment: employer NI is deducted from your fees, then you pay employee NI and Income Tax as if you were an employee. You get a 5% flat expense allowance. The difference is typically 20-25% less take-home pay inside IR35.

What is the most tax-efficient structure for UK contractors in 2025/26?

For contractors outside IR35, a limited company is typically the most tax-efficient structure. You take a salary at the Personal Allowance (£12,570) and extract remaining profits as dividends, which are taxed at lower rates than income. For those inside IR35, the tax treatment is similar to PAYE so the structure choice matters less. Sole trading is simpler but slightly less efficient at higher income levels.

These calculations are estimates based on current published tax rates. They do not constitute financial, tax, or legal advice. Always consult a qualified accountant for your specific situation.

Tax rates sourced from HMRC published rates for the 2025/26 tax year. Last verified: March 2026.