£725 a day inside and outside IR35

Where £159,500 goes inside IR35

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

Where £159,500 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.

£725 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 £137,793 to match the inside IR35 take-home, and about £142,979 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 £137,792 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 £144,295 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 £34,488.

Dividend tax outside IR35

Your salary and dividends add up to £122,376, so £72,106 of the dividends fall in the higher-rate band and are taxed at 35.75%. Dividend tax comes to £32,574, paid through Self Assessment by 31 January after the tax year ends.

In Scotland

Inside IR35 a Scottish taxpayer takes home £79,251, £5,565 less than in the rest of the UK, because the umbrella salary is taxed at Scottish rates. Outside IR35 the difference is £40, because the tapered allowance puts part of the salary into Scottish tax bands.

What one more day is worth

Billing one more day at £725 adds about £330 to your take-home inside IR35, 46% of the day rate, because the top of your umbrella salary is in the additional-rate band. Outside IR35 it adds about £223 (31%), and there your top slice of dividends is in the £100,000 to £125,140 range, where the Personal Allowance is withdrawn. At this rate an extra day is worth more inside IR35 than outside it.

The gap per day billed

The £2,749 gap works out at £12.49 for each day you bill. That equals about 3.8 days' billing at £725: less than one working week of work a year. At £750 a day it narrows by £594 to £2,154.

The next tax threshold

Your umbrella salary inside IR35 is already over £125,140, so there is no higher band to reach. At about £743 a day, your salary plus dividends outside IR35 reaches the £125,140 additional-rate threshold, 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

• £650 a day (£77,490 in · £82,502 out)
• £675 a day (£79,769 in · £84,190 out)
• £700 a day (£82,292 in · £85,877 out)
• £750 a day (£87,340 in · £89,494 out)
• £775 a day (£89,864 in · £91,946 out)
• £800 a day (£92,388 in · £94,398 out)

Every day rate inside and outside IR35 · £138,000 salary after tax · Change the days, umbrella fee or company costs

Common questions