£425 a day inside and outside IR35

Where £93,500 goes inside IR35

The umbrella company takes its costs out of the day rate before it pays you a salary through PAYE.

Where £93,500 goes outside IR35

Your company pays you a £12,570 salary, pays Corporation Tax on the profit and pays out what is left as dividends.

£425 a day by days worked

Take-home per year. Fewer billable days means less income but also a smaller share lost to higher-rate tax.

What permanent salary this is worth

An employee would need a salary of about £80,650 to match the inside IR35 take-home, and about £87,715 to match outside IR35. That ignores holiday pay, sick pay and employer pension, which a permanent job adds on top.

Higher-rate tax inside IR35

The umbrella pays you a gross salary of £80,649, so £30,379 of it is taxed at 40%. Each extra day at £425 adds about £211 to your take-home inside IR35.

Corporation Tax marginal relief

The company makes £78,295 profit, which sits between £50,000 and £250,000. The first £50,000 is effectively taxed at 19% and the rest at 26.5%, giving a total Corporation Tax bill of £16,998.

Dividend tax outside IR35

Your salary and dividends add up to £73,866, so £23,596 of the dividends fall in the higher-rate band and are taxed at 35.75%. Dividend tax comes to £12,435, paid through Self Assessment by 31 January after the tax year ends.

In Scotland

Inside IR35 a Scottish taxpayer takes home £55,002, £2,333 less than in the rest of the UK, because the umbrella salary is taxed at Scottish rates. Outside IR35 the difference is nil, because dividends are taxed at the same rates across the UK and a £12,570 salary is tax-free.

What one more day is worth

Billing one more day at £425 adds about £211 to your take-home inside IR35, 50% of the day rate, because the top of your umbrella salary is in the higher-rate band. Outside IR35 it adds about £201 (47%), with your top slice of dividends in the same band. So an extra day is worth almost the same either way.

The gap per day billed

The £4,098 gap works out at £18.63 for each day you bill. That equals about 9.6 days' billing at £425: between one and two working weeks of work a year. At £450 a day it narrows by £165 to £3,933.

The next tax threshold

At about £527 a day, your umbrella salary inside IR35 reaches the £100,000 point where the Personal Allowance starts to shrink, a long way above this rate. At about £587 a day, your salary plus dividends outside IR35 reaches the £100,000 point where the Personal Allowance starts to shrink, a long way above this rate.

Guides and definitions

• High Income Child Benefit Charge: how it is worked out and cut (Guide)
• How to read your payslip: every line explained, with an example (Guide)
• National Insurance rates 2026/27: what you pay and how it works (Guide)
• Emergency tax code (An emergency tax code, marked W1, M1 or X, taxes each payday on its own, as if you were paid that amount every period of the year.)
• Marginal tax rate (Your marginal tax rate is the share of your next pound or dollar of income that goes in tax and deductions.)
• P11D (A P11D is the form UK employers send HMRC by 6 July to report each employee's taxable benefits and expenses that were not taxed through payroll.)
• P60 (A P60 is the yearly summary of your pay and tax from one employer, due by 31 May if you work there on 5 April.)
• Personal Allowance (The Personal Allowance is the income you can earn each UK tax year before Income Tax starts: £12,570 for 2026/27.)

Change the days, umbrella fee or company costs

Other day rates

• £350 a day (£49,048 in · £53,640 out)
• £375 a day (£51,810 in · £56,237 out)
• £400 a day (£54,572 in · £58,834 out)
• £450 a day (£60,096 in · £64,029 out)
• £475 a day (£62,858 in · £66,626 out)
• £500 a day (£65,620 in · £69,224 out)

Every day rate inside and outside IR35 · £81,000 salary after tax · Change the days, umbrella fee or company costs

Common questions