Contractor take-home · 2026/27 tax year

£575 a day inside and outside IR35

£575 a day for 220 days is £126,500 a year before tax. Inside IR35 through an umbrella company you take home about £72,061 (£6,005 a month). Outside IR35 through your own limited company you take home about £77,016 (£6,418 a month), which is £4,954 more.

Figures checked against GOV.UK on 24 September 2026.

Billed a year

£126,500

220 days at £575

Inside IR35

£72,061

take-home, umbrella

Outside IR35

£77,016

take-home, limited company

Difference

£4,954

a year

Where £126,500 goes inside IR35

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

	Per year	Per month
Billed by the umbrella	£126,500	£10,542
Umbrella fee (£25 a week)	−£1,100	−£92
Employer National Insurance (15%)	−£15,633	−£1,303
Apprenticeship Levy (0.5%)	−£546	−£46
Your gross salary	£109,221	£9,102
Income Tax	−£32,964	−£2,747
Employee National Insurance	−£4,195	−£350
Take-home	£72,061	£6,005

Where £126,500 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.

	Per year	Per month
Billed by your company	£126,500	£10,542
Director salary	−£12,570	−£1,048
Employer NI on salary	−£1,136	−£95
Running costs	−£1,500	−£125
Corporation Tax	−£25,743	−£2,145
Dividends paid to you	£85,551	£7,129
Salary plus dividends	£98,121	£8,177
Tax on salary and dividends	−£21,106	−£1,759
Take-home	£77,016	£6,418

£575 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.

Days a year	Billed	Inside IR35	Outside IR35	Difference
160 days	£92,000	£56,731	£60,723	£3,992
180 days	£103,500	£62,456	£66,154	£3,698
200 days	£115,000	£68,181	£71,585	£3,404
220 days	£126,500	£72,061	£77,016	£4,954
240 days	£138,000	£75,812	£80,968	£5,155

What permanent salary this is worth

An employee would need a salary of about £109,221 to match the inside IR35 take-home, and about £122,258 to match outside IR35. That ignores holiday pay, sick pay and employer pension, which a permanent job adds on top.

The £100,000 trap inside IR35

Your umbrella salary of £109,221 is over £100,000, so you lose £1 of Personal Allowance for every £2 above it. Paying into a pension through the umbrella's salary sacrifice scheme brings that income down and gets back the tax-free allowance.

Corporation Tax marginal relief

The company makes £111,295 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 £25,743.

Dividend tax outside IR35

Your salary and dividends add up to £98,121, so £47,851 of the dividends fall in the higher-rate band and are taxed at 35.75%. Dividend tax comes to £21,106, paid through Self Assessment by 31 January after the tax year ends.

In Scotland

Inside IR35 a Scottish taxpayer takes home £68,070, £3,992 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 £575 adds about £187 to your take-home inside IR35, 33% of the day rate, because the top of your umbrella salary is in the £100,000 to £125,140 range, where the Personal Allowance is withdrawn. Outside IR35 it adds about £272 (47%), and there your top slice of dividends is in the higher-rate band. So each extra day widens the gap in favour of working outside IR35.

The gap per day billed

The £4,954 gap works out at £22.52 for each day you bill. That equals about 8.6 days' billing at £575: between one and two working weeks of work a year. At £600 a day it widens by £301 to £5,255.

The next tax threshold

At about £659 a day, your umbrella salary inside IR35 reaches the £125,140 additional-rate threshold, which is £84 a day 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, so the next rate up on this site already crosses it.

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

£500 a day (£65,620 in · £69,224 out)
£525 a day (£68,382 in · £71,821 out)
£550 a day (£70,252 in · £74,418 out)
£600 a day (£73,871 in · £79,126 out)
£625 a day (£75,680 in · £80,814 out)
£650 a day (£77,490 in · £82,502 out)

Every day rate inside and outside IR35 · £109,000 salary after tax · Change the days, umbrella fee or company costs

Common questions

How much is £575 a day a year?

£126,500 over 220 working days. Over 230 days it would be £132,250, and over 200 days £115,000. Contractors are not paid for holidays or bank holidays, so 220 days is a common planning figure.

What is £575 a day inside IR35 after tax?

About £72,061 a year, or £6,005.12 a month, through an umbrella company charging £25 a week. The umbrella's gross salary is £109,221 after it pays £15,633 employer National Insurance and £546 Apprenticeship Levy out of the rate.

What is £575 a day outside IR35 after tax?

About £77,016 a year, or £6,417.96 a month, with a £12,570 salary and the rest paid as dividends. The company pays £25,743 Corporation Tax and you pay £21,106 personal tax.

What permanent salary is £575 a day equivalent to?

For the same take-home pay you would need a salary of about £109,221 compared with working inside IR35, or £122,258 compared with outside IR35, before counting holiday pay and pension.

Is £575 a day worth more outside IR35?

Yes, by about £4,954 a year at 220 days. Outside IR35 you also carry more admin and risk: running a company, filing accounts and Self Assessment, and paying for your own insurance.

Sources and assumptions

220 billable days a year, an umbrella fee of £25 a week and £1,500 a year of limited company running costs.
Inside IR35: the day rate is an umbrella rate, so employer National Insurance and the Apprenticeship Levy come out of it. No pension or student loan.
Outside IR35: a single-director company that cannot claim Employment Allowance, a £12,570 salary and all profit paid as dividends in the same tax year.

These are estimates. Your own figures depend on your umbrella, your accountant's advice, expenses and any other income.