Use this IR35 calculator to see the take home pay differences between three different contractor income scenarios including Umbrella Company, Limited Company Outside IR35 and Limited Company Inside IR35.
One moment, Running Calculation ...
Enter the start date of the contract
Enter the end date of the contract
What is the 'daily' billed rate for this contract (before any deductions)?
What are your estimated 'daily' expenses?
How many days per week do you work in this contract?
Does your work week include weekend days?
Does your contract require you to work during bank holidays?
Do you have a student loan deduction? Tick if you do!
If you have a student loan, what type of loan scheme is it?
What is your weekly pension contribution? e.g. £50 (used when deducting from payrolls - figures may differ between PSC and Umbrella)
You can change the weekly fee charged by the Umbrella Company here. We have set it as £30 by default.
IR35 Tax Calculator
Use this fast, easy to use and in-depth tax calculator to see the differences between take home income and deductions for a contracting job. We will illustrate the differences between using an umbrella company to handle payslips, to setting up your own limited company (PSC) and check the tax implications of being inside IR35 or outside IR35.
Contractors have come under more stringent tax legislation in recent years. IR35 rules have been around since the early 2000's but have become tighter with every revision. The most recent updates may affect contractors who use 'Personal Service Companies' as entities for receiving contracting income.
In order to help with decision making and just to outline some of the differences in methods for receiving contracting income, we have produced this fast IR35 calculator.
How To Use
There are three scenarios that will be calculated with just a few details entered by you. You can enter a typical contract's details, such as the start and end dates, the charge rate and your working pattern.
We figure out the length of the contract, taking into account any weekends or bank holidays along the dates and work out your chargeable amounts, expenses and then the varying tax structures.
The calculator will automatically be able to deduce the correct tax year, or multiple tax years if the contract spans more than one. It will then work out scenarios for:
A contractor who is inside IR35 and paid via an Umbrella Company. The Umbrellla Company will deduct fees, expenses, employers' national insurance and then run payroll on your income. The taxation figures will be logged to produce a summary of this option.
A contractor who is outside IR35 and paid via their own Personal Service Company. The engaging company will pay the PSC the billed gross chargeable amount and then the PSC will deduct expenses before extracting profits in a tax-efficient manner.
A contractor who is inside IR35 and paid via their own Personal Service Company. This is the latest option that is due to have major changes. More about this below.
Contractors working within IR35 but choosing to have charges paid to their PSC will, from April 2020, find that the engaging company will be deducting taxes at source before paying their PSC. They will then have the reduced amount to deduct costs from and then extract profits.
For all of these options there are a number of assumptions used:
* does not account for VAT.
* assumes no other income in tax year of any other type aside from what is input.
* for the umbrella company option, pension amounts are based on the amount taken on weekly payslips.
* input charged rate is daily, as are expenses.
* umbrella company pays weekly and is assumed to charge £30 per week for its services, however this can be overridden.
* for contracts spanning across tax years, all figures are apportioned by checking the number of days worked within each tax year and then calculated to individual tax years with both individual and combined totals given.
* Contractors inside IR35 and using a PSC will have tax deducted at source on their gross billed charge. The employers' NI figure arising from the billed charge is calculated by the engaging company's payroll. This is then paid out of the billed amount so actual payment to the PSC is based by first reverse calculating ER NIC and then taking the employees taxes at source on the reduced amount.
* PSC having deduced tax at source is based on an annual tax basis NOT cumulative. This means a contract for 2000 for one month will not have tax deducted - but a cumulative basis should normally deduct. The contractor would correct the overcharge on their tax return.
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