£600 a day inside and outside IR35

Where £132,000 goes inside IR35

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

Where £132,000 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.

£600 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 £113,983 to match the inside IR35 take-home, and about £127,057 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 £113,983 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 £116,795 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 £27,201.

Dividend tax outside IR35

Your salary and dividends add up to £102,164, so £51,894 of the dividends fall in the higher-rate band and are taxed at 35.75%. Dividend tax comes to £22,821, paid through Self Assessment by 31 January after the tax year ends.

In Scotland

Inside IR35 a Scottish taxpayer takes home £69,522, £4,349 less than in the rest of the UK, because the umbrella salary is taxed at Scottish rates. Outside IR35 the difference is £11, because the tapered allowance puts part of the salary into Scottish tax bands.

What one more day is worth

Billing one more day at £600 adds about £196 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day rate, because the top of your umbrella salary is in the £100,000 to £125,140 range, where the Personal Allowance is withdrawn.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 £184 (31%), 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 £5,255 gap works out at £23.89 for each day you bill. That equals about 8.8 days' billing at £600: between one and two working weeks of work a year. At £625 a day it narrows by £122 to £5,133.

The next tax threshold

At about £659 a day, your umbrella salary inside IR35 reaches the £125,140 additional-rate threshold, which is £59 a day above this rate. At about £743 a day, your salary plus dividends outside IR35 reaches the £125,140 additional-rate threshold, 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

• £525 a day (£68,382 in · £71,821 out)
• £550 a day (£70,252 in · £74,418 out)
• £575 a day (£72,061 in · £77,016 out)
• £625 a day (£75,680 in · £80,814 out)
• £650 a day (£77,490 in · £82,502 out)
• £675 a day (£79,769 in · £84,190 out)

Every day rate inside and outside IR35 · £114,000 salary after tax · Change the days, umbrella fee or company costs

Common questions