For UK contractors, IT consultants, and interim managers, IR35 (Off-Payroll Working Rules) is the single biggest factor determining how much of your day rate ends up in your personal bank account.
Take-Home Pay Comparison: £500/Day Rate (£110,000 Gross)
| Tax / Expense Item | Outside IR35 (Ltd Co) | Inside IR35 (Umbrella PAYE) |
|---|---|---|
| Gross Revenue | £110,000 | £110,000 |
| Employers NI & Levy | £0 | -£13,200 |
| Personal Income Tax & NI | -£10,800 | -£31,500 |
| NET TAKE-HOME PAY | ~£79,700 (72.4%) | ~£64,100 (58.2%) |
| ANNUAL DIFFERENCE | +£15,600 / year | -£15,600 / year |
Understand progressive tax brackets and tax rates with our free Tax Bracket Calculator.
Disclaimer: This article is for educational purposes only and does not constitute financial, legal, or medical advice. Consult a qualified professional for guidance specific to your situation.