Finance Tool · 2026/27 tax year
Inside IR35 Calculator
This inside IR35 calculator shows every deduction between an assignment rate and the money in your account. At £500 a day through an umbrella company, a UK contractor takes home about £65,519 a year — £5,460 a month — which is 59.6% of the £110,000 assignment rate, on 2026/27 rates with 220 billable days and a £25 a week margin.
The part most umbrella calculators hide is the first half of that journey. Employer National Insurance, the Apprenticeship Levy and the umbrella’s margin come out of the assignment rate before your gross pay exists, so they never appear as income anywhere on your payslip. This page prints that half in full, reconciles it back to the assignment rate to the penny, splits out rolled-up holiday pay, distinguishes the two legally different inside-IR35 routes, and puts the same contract side by side with an outside-IR35 limited company. Nothing you type leaves your browser.
Every statutory rate verified against gov.uk on 3 August 2026. The umbrella margin is a commercial fee with no statutory figure and is yours to edit.
Work out your inside-IR35 take-home pay
220 is typical after leave and gaps
Income tax, employee NI and any student loan are deducted through PAYE by the umbrella.
Check your Key Information Document. An assignment rate has to absorb employment costs; a PAYE rate does not, and is worth materially more.
Typically £15–£35; a commercial fee, not a statutory rate
Taken from the assignment rate before employer NI is calculated
- Assignment income£500.00 a day × 220 billable days
- £110,000.00
- Umbrella margin£25.00 a week × 52 weeks — a commercial fee, not a statutory rate
- -£1,300.00
- Employer National Insurance15% of gross above £5,000 — 14.21% of gross pay
- -£13,464.29
- Apprenticeship Levy0.5% of gross pay
- -£473.81
What reaches your payslip. gov.uk sets this order: umbrella margin, employer National Insurance, employer pension, holiday pay, Apprenticeship Levy — then gross pay.
- Gross pay£84,556.00 basic plus £10,205.91 rolled-up holiday pay
- £94,761.90
- Income TaxPersonal Allowance £12,570.00
- -£25,336.76
- Employee National Insurance8% from £12,570, 2% above £50,270
- -£3,905.84
2026/27 tax year, England, Wales and Northern Ireland income tax rates, National Insurance category A, annualised. Source: HMRC.
- Take-home pay£65,519
- Income Tax£25,337
- Employee NI£3,906
- Employer NI, levy and margin£15,238
Method
How this inside IR35 calculator gets from your rate to gross pay
It works as an umbrella take home pay calculator, an umbrella vs limited calculator and a deemed payment calculator, keeping each legally distinct route separate.
An assignment rate is not a wage. It is the price the agency pays the umbrella for supplying you, and it is meant to cover the entire cost of employing you. gov.uk lists what comes out of it before your gross pay is set, in this order: the umbrella company’s operating costs, employer National Insurance, employer workplace pension, holiday pay, and the Apprenticeship Levy where it applies. Only what survives that list is gross pay, and only then do income tax and employee National Insurance apply.
Here is the part that makes this arithmetic harder than it looks, and the reason published figures disagree. Employer National Insurance and the Apprenticeship Levy are charged on gross pay — but gross pay is the thing you are trying to find. You cannot take 15% of the assignment rate, because that is not the base HMRC charges. What is true is that the pot left after the margin has to satisfy an equation:
Above the £5,000 Secondary Threshold that inverts to gross = (pot + 750) ÷ 1.155, where the 750 is the threshold relief and the 1.155 is one plus the employer NI and levy rates. This calculator solves it numerically rather than hardcoding 1.155, so it stays correct if a Budget moves the threshold or you add a pension percentage.
Take £500 a day over 220 billable days. The assignment is £110,000.00. A £25 a week margin takes £1,300.00, leaving £108,700.00 to cover both gross pay and the employment costs charged on it. Solving gives gross pay of £94,761.90, employer National Insurance of £13,464.29 and an Apprenticeship Levy of £473.81. Add those four numbers back together and you get £110,000.00 — the assignment rate, to the penny. That closing check is the whole point: get the inversion wrong and it will not close.
Notice what employer National Insurance actually comes to as a share of gross pay: 14.21%, not 15%, because the first £5,000 of gross carries no secondary contribution. If an umbrella illustration shows employer NI at exactly 15% of gross, it has dropped the Secondary Threshold relief and is charging you £750.00 too much.
Start from the assignment income
Day rate multiplied by the days you will actually bill. Billable days move the answer more than any tax setting on this page, and 220 is a realistic year once leave and gaps between contracts are counted.
Take off the umbrella's margin
A flat commercial fee, typically £15 to £35 a week, disclosed in your Key Information Document. It should never be a percentage of your rate.
Solve for gross pay
Employer National Insurance at 15% above £5,000, plus the 0.5% Apprenticeship Levy, are charged on gross pay — so gross has to be solved for, not multiplied out. The four lines must add back to the assignment income.
Run gross pay through PAYE
Income tax on the band set for where you live, employee National Insurance at 8% then 2%, and student loan if you are on a plan. What is left is your take-home pay.
Worked examples
Five contractors, five different answers
Priya, a £500-a-day BI developer on her first inside-IR35 renewal
£500 a day, 220 billable days, £25 a week umbrella margin, England, no pension, no student loan.
She keeps 59.6p of every pound of her assignment rate. The part that surprises people is not the income tax — it is the £13,938.10 of employment cost that never appears as income anywhere on her payslip, because it is deducted before gross pay is set. Her contract is worth £110,000; the number that belongs next to a permanent salary offer is the £94,761.90 gross.
Tom, a £350-a-day support analyst weighing an umbrella offer against a permanent job
£350 a day, 220 billable days, £20 a week margin, England, no pension.
The honest permanent-equivalent of Tom's rate is £66,415.58, not the £77,000 headline. That is why a contract that looks like £77,000 can lose to a £70,000 permanent role once an employer pension above the auto-enrolment minimum, paid sick leave and notice protection are priced in — none of which he gets from the end client.
Dan, a £750-a-day interim programme director inside the £100,000 taper
£750 a day, 220 billable days, £30 a week margin, England, no pension.
Dan's gross of £142,155.84 is past £125,140, so his Personal Allowance is £0.00 and his retention falls to 52.8p. Everything he earned between £100,000 and £125,140 of gross was taxed at a 62% marginal rate — 60% income tax as the allowance withdrew, plus 2% National Insurance — which is the single strongest argument for the pension route below.
Priya again, sacrificing 5% into the umbrella pension
As above, plus a 5% employer pension contribution taken from the assignment rate before gross pay is set.
Take-home cash falls by £2,280.57 and the pension pot gains £4,541.49 — about 2.0 times the cash given up. The sacrifice comes out of the pot before employer NI and the levy are calculated, so it escapes 15% plus 0.5% of employment cost as well as 40% income tax and 2% employee NI. Total value rises from £65,519.30 to £67,780.22.
The same £110,000 contract, inside against outside IR35
£110,000 of contract value both ways. Outside is modelled as a £12,570 salary, £1,500 of accountancy, and every pound of post-tax profit distributed.
Inside pays £65,519.30 and outside pays £69,223.64 — a gap of £3,704.34, or 5.7%. That is far narrower than contractor folklore assumes, because dividend rates rose to 10.75% and 35.75% for 2026/27 and Corporation Tax bites at an effective 22.5% in the Marginal Relief band.
Umbrella vs limited
The same contract inside and outside IR35
This is the comparison the umbrella-versus-limited question is really asking, run on the contract value in the calculator above. The outside-IR35 side takes a tax-efficient salary, pays employer National Insurance on it, deducts accountancy, pays Corporation Tax on the profit, and distributes everything left as dividends. It is not a choice you get to make freely: a contract is inside or outside IR35 on its facts, and the client decides for all but the smallest end clients. It is a comparison worth having when you are pricing a role or deciding whether to keep a company open.
£12,570 is both the Personal Allowance and the NI Primary Threshold
Deductible against Corporation Tax before profit is worked out
| Line | Inside (umbrella) | Outside (limited) |
|---|---|---|
| Contract value | £110,000.00 | £110,000.00 |
| Employer National Insurance | £13,464.29 | £1,135.50 |
| Provider fee or accountancy | £1,300.00 | £1,500.00 |
| Corporation Tax | £0.00 | £21,370.54 |
| Income tax and dividend tax | £25,336.76 | £16,770.31 |
| Employee National Insurance | £3,905.84 | £0.00 |
| Take-home | £65,519.30 | £69,223.64 |
Why Corporation Tax is neither 19% nor 25%
A one-person consultancy almost always lands between the two published rates. Profits up to £50,000 are charged at 19% and profits above £250,000 at 25%, but in between Marginal Relief tapers the main rate down. HMRC’s formula reduces the main-rate charge by the standard fraction of 3/200 multiplied by the distance from the upper limit. On £94,794.50 of profit that is £23,698.63 less £2,328.08, giving £21,370.54 — an effective 22.5%. The rate that actually matters for a decision is neither of these: each extra pound of profit inside the band is taxed at 26.5%, which is why bringing a pension contribution or a genuine business cost forward into a profitable year is worth more than the headline rate suggests.
Rate negotiation
How much more you need inside IR35 to stand still
The advice to add 20% to 30% to your rate when a contract goes inside IR35 is out of date. It was built on 19% Corporation Tax and dividend rates of 7.5% and 32.5%, none of which still apply. On 2026/27 numbers the uplift that actually matches an outside-IR35 take-home runs between 3% and 15.1% across the range below. Matching £500 a day outside needs about £537 a day inside.
| Outside rate | Outside net | Inside net at the same rate | Inside rate to match | Uplift |
|---|---|---|---|---|
| £300 | £48,445 | £43,424 | £345 | 15.1% |
| £400 | £58,834 | £54,472 | £439 | 9.9% |
| £500 | £69,224 | £65,519 | £537 | 7.3% |
| £600 | £79,126 | £73,805 | £670 | 11.6% |
| £700 | £85,877 | £82,201 | £736 | 5.2% |
| £750 | £89,494 | £87,248 | £772 | 3% |
The uplift does not fall smoothly as the rate rises, and that is not a rounding artefact. It jumps wherever the umbrella side has crossed a threshold that the limited company side has not yet reached. The spike around £600 a day is the Personal Allowance taper: umbrella gross there is roughly £113,810, inside the £100,000 to £125,140 band, while the limited company has kept most of its income as dividends and total income has only just passed £100,000. If your rate sits near one of those steps, quote the number your own rate implies rather than a percentage from a forum.
What one more pound of assignment rate is worth
The figure that should drive a rate negotiation is not the average deduction but the marginal one: how much of the next pound you actually keep. Two effects compound. The extra pound has to carry employer National Insurance and the Apprenticeship Levy before it becomes gross pay, and the gross pay is then taxed at your marginal rate.
| Gross pay | Where you are | You keep |
|---|---|---|
| £30,000 | Basic rate, 8% National Insurance | 62.3p |
| £60,000 | Higher rate, 2% National Insurance | 50.2p |
| £110,000 | Personal Allowance taper — 62% marginal rate | 32.9p |
| £140,000 | Additional rate, allowance already gone | 45.9p |
Inside the Personal Allowance taper an extra pound of assignment rate is worth about 32.9p in the hand — less than it is worth to a contractor on half the rate. That is the arithmetic behind every experienced contractor’s instinct to push a rate rise into a pension rather than a payslip once they are near £100,000.
The two routes
Umbrella employment and the deemed employment payment
“Inside IR35” covers two arrangements that are taxed alike but work differently, and conflating them is the most common error in this subject. Almost all inside-IR35 contractors are on the first.
Route A: employed by an umbrella company
You become a genuine employee of the umbrella, with a contract of employment, statutory holiday, statutory sick pay, pension auto-enrolment and continuity of employment across assignments. The agency pays the umbrella an assignment rate; the umbrella strips its employment costs out of it and runs PAYE on what is left, including any student loan. This is the default the calculator above models, and it is what the overwhelming majority of inside-IR35 traffic is really asking about.
Route B: your own company, paid a deemed employment payment
You keep your limited company, but the client has issued a Status Determination Statement putting the engagement inside IR35 under the Chapter 10 off-payroll rules. The deemed employer — usually the agency closest to your company in the chain — deducts income tax and employee National Insurance from your fee before paying it over, and pays employer National Insurance and the Apprenticeship Levy to HMRC. Two consequences follow that most pages get wrong. Student and postgraduate loan repayments are not deducted by the deemed employer, so they fall to Self Assessment; and the money arrives in your company already taxed, so it can be drawn out without further personal tax.
What changed on 6 April 2026
From 6 April 2026, responsibility for making sure PAYE is operated correctly on umbrella workers’ pay sits with the recruitment agency that supplies the worker, or with the end client where no agency is involved. HMRC can recover underpaid PAYE from them rather than pursuing only the umbrella. The umbrella still runs the payroll day to day, and — this is the part worth stating plainly because no competing page does — your payslip arithmetic is unchanged. The same deductions apply in the same order and produce the same net pay as before. What moved is the liability when an umbrella takes tax from your pay and does not hand it to HMRC, which is exactly how workers ended up carrying losses in the disguised remuneration schemes of the last decade.
United Kingdom · 2026/27
UK rules, Scottish rates and where the figures come from
Every statutory figure on this page is set by HM Revenue & Customs and applies across the United Kingdom. HMRC’s guidance on working through an umbrella company, last updated on 17 September 2025, sets the legal order of deductions. Its rates and thresholds for employers 2026 to 2027 give the 15% secondary rate, the £5,000 Secondary Threshold and the 0.5% Apprenticeship Levy. The Department for Business and Trade sets the 12.07% rolled-up holiday pay rule. HM Treasury put the scale of the umbrella market at roughly 700,000 workers when it published its November 2025 policy paper on umbrella company non-compliance, costing the resulting PAYE changes at £715 million for 2026 to 2027.
Scotland is a sub-jurisdiction here rather than a separate authority, and the distinction is easy to get wrong. Scottish taxpayers pay Scottish income tax rates on employment income — six bands running from 19% to 48% — but UK-wide rates on dividends. So the Scottish setting on this calculator changes the income tax on umbrella gross pay and leaves the dividend leg of the outside-IR35 comparison alone. At £500 a day the difference is real: a Scottish umbrella contractor takes home £62,481.16 against £65,519.30 elsewhere in the UK, a gap of £3,038.15 a year. National Insurance, employer National Insurance and the Apprenticeship Levy are not devolved and are identical everywhere.
One document is worth more to you than any calculator, including this one. Since 6 April 2020, regulation 13A of the Conduct of Employment Agencies and Employment Businesses Regulations 2003 has required an agency to give every agency worker a Key Information Document before terms are agreed, with a dedicated annex where an umbrella is involved. It states the assignment rate, the margin and the deductions you should expect. Enforcement passed from the Employment Agency Standards Inspectorate to the Fair Work Agency on 7 April 2026. Reconcile this page’s output against your Key Information Document and against HMRC’s own “Work out pay from an umbrella company” tool, and you will know within ten minutes whether your payslip is right.
Inside your gross pay
Rolled-up holiday pay is already in the number
As an umbrella employee you are entitled to 5.6 weeks of statutory leave, and it is funded from the assignment rate rather than added to it. For irregular-hours and part-year workers — which is most contractors — leave years starting on or after 1 April 2024 may be paid as rolled-up holiday pay at 12.07% of pay in the period, shown as a separate item on each payslip.
That percentage is 5.6 leave weeks divided by the 46.4 weeks you actually work, so it is added to basic pay rather than carved out of gross. On £94,761.90 of gross the split is £84,556.00 of basic pay plus £10,205.91 of holiday pay, which is about £1,822.48 for each week of leave. The practical point is a cash-flow one: if your holiday pay is rolled up you have already been paid for your leave, so a week off is a week with no income. Budget for it, or ask the umbrella to accrue the holiday pay and release it when you take leave instead — both are lawful, and which one you are on should be in your Key Information Document.
Get these right
Common mistakes and edge cases
Charging employer National Insurance against the assignment rate. The defining error of this tool class. 15% of £110,000 is £16,500; the correct answer is £13,464.29, because the charge falls on gross pay and gross pay is what you are solving for. The £3,000 difference lands straight in the take-home figure. The test that catches it is arithmetic rather than opinion: margin plus employer NI plus levy plus gross must add back to the assignment income exactly, which is why this page prints that reconciliation.
Dropping the Secondary Threshold relief. Employer NI is 15% of gross pay above £5,000, not of gross pay. Forgetting the £750.00 of relief makes the deduction come out at exactly 15% of gross rather than 14.21%. That is the fastest way to audit any umbrella illustration in ten seconds: divide the employer NI line by the gross pay line, and if it reads 15.00% the threshold has been missed.
Taking rolled-up holiday pay as 12.07% of gross. The 12.07% is 5.6 statutory leave weeks divided by the 46.4 weeks actually worked, so it is a percentage added to basic pay, not carved out of gross. Holiday is gross × 0.1207 ÷ 1.1207. On £94,761.90 that is £10,205.91 of holiday on £84,556.00 of basic pay; taking 12.07% of gross instead returns £11,437.76, overstating it by about 12% of itself.
Deducting student loan on a deemed employment payment. An umbrella employee repays through PAYE like anyone else. A limited company receiving a deemed employment payment does not: gov.uk states that student and postgraduate loan repayments are not deducted by the deemed employer. A calculator that shows the same monthly deduction on both routes is wrong on one of them, and the direction matters — the deemed-payment worker sees a better monthly figure and a Self Assessment bill they have not budgeted for.
Passing in a Personal Allowance of £12,570 above £100,000. From £100,000 of gross, every £2 of income removes £1 of allowance, and by £125,140 there is none left. Day rates from about £550 push umbrella gross into that band. Hardcoding the full allowance understates the tax by up to £5,028.00 and hides the fact that the marginal rate in the band is 62% rather than the 42% a rate table implies.
Reading the annual figure as payslip-exact. HMRC assesses secondary Class 1 on each pay reference period, not on the year. A contractor who bills six months of the year genuinely receives more than one annual Secondary Threshold's worth of relief, so their real employer NI is lower than an annualised model shows. Annualising is the right default for planning a rate, but it is an approximation for anyone whose work is seasonal, and no annual calculator — including this one — can be reconciled penny-for-penny against a payslip run weekly.
Netting off the Employment Allowance. The £10,500 Employment Allowance helps neither route. It is a whole-employer figure, so an umbrella with thousands of employees exhausts it in the first days of the tax year and no individual worker sees any of it. A single-director limited company with no other employee liable for secondary Class 1 is excluded from claiming it at all. Subtracting it flatters both sides of the comparison and changes which one appears to win.
Expecting the Apprenticeship Levy allowance to protect you. The £15,000 levy allowance means the 0.5% charge only starts above a £3,000,000 pay bill — a figure every real umbrella clears many times over. At the margin each worker's pay therefore carries the full 0.5%, which is £473.81 a year here. gov.uk writes "if applicable" because small employers escape it; in the umbrella market it always applies.
Quoting the "add 20 to 30%" rule of thumb. On 2026/27 numbers the required uplift runs between 3% and 15.1% across the £300 to £750 range modelled below — nowhere near 20%. The old rule was built on 19% Corporation Tax and 7.5%/32.5% dividend rates that no longer exist. Asking for a 25% uplift on a rate the client has already benchmarked is a good way to lose a renewal you would have been happy to take.
Related
Related contractor pay concepts
The true cost of employing someone. The largest single deduction in the umbrella waterfall is a tax the worker never formally pays. Seeing it as a cost the assignment rate was priced to carry, rather than as something taken from your wages, is what makes the whole model make sense — and it is the same number a hiring manager is looking at from the other side of the table. The employer NI calculator works it out from the employer’s point of view, including the Employment Allowance and the category letters that reduce it.
Pension salary sacrifice. The mechanics of a sacrifice made through an umbrella are the same as one made through any employer, but the leverage is unusual because the contribution comes out of a pot that has not yet been reduced by employment costs. The salary sacrifice calculator models the trade in detail, including the annual allowance, the National Minimum Wage floor a sacrifice must not breach, and the cap on the National Insurance exemption announced for April 2029.
Dividend taxation. The limited company advantage has compressed for a specific reason: the dividend allowance has fallen to £500 and the ordinary and upper rates rose by two percentage points for 2026/27. The dividend tax calculator covers the distribution side on its own, including how a dividend stacks on top of salary and can taper away a Personal Allowance that the salary alone would have kept.
Pricing a day rate against a salary offer. The right comparator for a contract rate is the gross pay figure, not the assignment rate, and even that overstates the contract because it carries no employer pension above the auto-enrolment minimum, no paid sick leave and no notice protection. The UK salary calculator takes a permanent salary through the same tax and National Insurance to a monthly number you can hold next to the one above.
Self Assessment while you are contracting. Most inside-IR35 contractors still file a return: for a company director it is expected, and a deemed-payment worker has a student loan balance to settle and payments on account to plan for. The self-employed tax calculator covers the Self Assessment timetable, payments on account and the interest and penalty regime for filing late.
Questions
Frequently asked questions
How much is £500 a day inside IR35?
About £65,519 a year, or £5,459.94 a month, working 220 billable days through an umbrella company with a £25 a week margin in 2026/27. That is 59.6% of the £110,000 assignment. The order matters: £13,464.29 of employer National Insurance, £473.81 of Apprenticeship Levy and £1,300.00 of margin come off the assignment rate first, leaving £94,761.90 of gross pay. Income tax of £25,336.76 and employee National Insurance of £3,905.84 then come off that. Two inputs move the answer more than anything else: billable days, because 200 days rather than 220 removes £10,000 of assignment income before any tax is considered, and a pension sacrifice, which changes the answer more than shopping around for a cheaper margin ever will.
How much should I increase my rate for an inside-IR35 contract?
Between about 3% and 15.1% on 2026/27 numbers, depending where your rate sits — not the 20% to 30% still repeated on contractor forums. Matching a £500 a day outside-IR35 take-home needs about £537 a day inside. The uplift does not fall smoothly as the rate rises: it is largest where the umbrella side has just crossed a tax threshold that the limited company side has not, which happens around £300 a day and again around £600 a day. The old rule of thumb assumed 19% Corporation Tax and much lower dividend rates, and both changed. Ask for the number your own rate actually implies rather than a round percentage, and bring the arithmetic.
Why is employer's National Insurance taken out of my day rate?
Because the assignment rate an agency pays an umbrella is meant to cover the whole cost of employing you, not your wages. gov.uk lists what comes out of it before your gross pay is set: the umbrella's operating costs or margin, employer National Insurance, employer pension, holiday pay, and the Apprenticeship Levy where it applies. Every one of those is a genuine employment cost that a permanent employer would carry separately on top of a salary. What is not legitimate is seeing employer National Insurance or an employer pension contribution listed below the gross pay line on your payslip. HMRC's guidance is blunt about it: the National Insurance and pension contributions taken off your gross pay should always be employee contributions, not employer. If yours are not, that is a compliance problem worth raising.
What changed for umbrella companies on 6 April 2026?
Legal responsibility for operating PAYE moved up the supply chain to the recruitment agency that supplies you, or to the end client where there is no agency. HMRC can now recover unpaid PAYE from them rather than pursuing only the umbrella. In practice the umbrella still runs the payroll and still issues your payslip, so nothing about the arithmetic on this page changed: the same deductions in the same order produce the same net pay before and after the reform. What changed is who carries the liability when an umbrella collects tax and fails to pay it over — historically the loss that landed on workers caught in disguised remuneration schemes. HM Treasury costed the measure at £715 million for 2026 to 2027, which is a fair indication of how much was going missing.
Is an umbrella or a limited company better if I'm inside IR35?
If the contract is genuinely inside IR35, a limited company buys you almost nothing. The deemed employment payment is taxed like employment income anyway, and you keep the accountancy fees, the filing deadlines and the Companies House obligations without the tax treatment that made them worth paying for. The limited company route only pays on genuinely outside contracts. Even there the advantage is smaller than most contractors expect: on the same £110,000 of contract value this page makes it £3,704.34 a year, about 5.7%. The one real argument for keeping a dormant company open through an inside-IR35 stint is optionality, not tax: it is there when the next outside contract appears.
What is a reasonable umbrella company margin?
There is no statutory figure, because the margin is a commercial fee rather than a rate — which is why it is an editable input here with a disclosed default rather than a fixed number. Published figures cluster between £15 and £35 a week: Parasol quotes a £15 average in its own calculator assumptions, and other providers quote up to £35. It should be a flat weekly fee rather than a percentage of your rate, and it must appear in the Key Information Document your agency gives you before you agree terms. Keep it in proportion: at £25 a week it is £1,300.00 a year, or 1.2% of a £500 a day assignment — the smallest deduction on this page and smaller than the employer NI difference between two umbrellas' payroll accuracy.
Do I get holiday pay through an umbrella company?
Yes, and it is already inside your assignment rate rather than added to it. You are a genuine employee of the umbrella, so you are entitled to 5.6 weeks of statutory leave. For irregular-hours and part-year workers — which describes most contractors — the umbrella may roll that up and pay 12.07% of pay in each period, clearly marked as a separate item on the payslip, for leave years starting on or after 1 April 2024. The practical consequence is a cash-flow one that catches people out every year: if your holiday pay is rolled up, you have already been paid for your leave, so a week off is a week with no invoice and no income. On £94,761.90 of gross the holiday element is £10,205.91, which is roughly £1,822.48 for each week of leave you take.
Are student loan repayments deducted inside IR35?
It depends which route you are on, and this is one of the few places where the two genuinely differ. Through an umbrella you are an employee, so 9% of earnings above your plan threshold — 6% for a Postgraduate Loan — comes out through PAYE automatically, alongside income tax and National Insurance. Through your own limited company on a deemed employment payment, no deduction is made: gov.uk states that student and postgraduate loan repayments are not deducted by the deemed employer, so you settle them through Self Assessment instead. The liability is identical; only the timing changes. The trap is budgeting against the better-looking monthly figure and then meeting a Self Assessment bill in January that includes a full year of repayments you have already spent.
Can I still contribute to a pension inside IR35?
Yes, and it is the most effective lever left to you. A contribution made through the umbrella comes out of the assignment rate before employer National Insurance and the Apprenticeship Levy are calculated, so it escapes 15% plus 0.5% of employment cost on top of the usual income tax and employee National Insurance relief. At £500 a day a 5% sacrifice costs £2,280.57 of take-home cash and puts £4,541.49 into the pot — roughly 2.0 times the cash given up. It is worth more again between £100,000 and £125,140 of gross, where the Personal Allowance taper makes the marginal rate 62%: at £750 a day the same 5% costs £3,126.25 and gains £6,812.86.
How do I check my umbrella payslip is correct?
Start with the Key Information Document your agency must give you before you agree terms, which sets out the assignment rate, the margin and the deductions you should expect. Then reconcile a payslip against it. The red flag is placement rather than size: employer National Insurance or an employer pension contribution appearing below the gross pay line means employment costs are being taken twice, once above the line and once as if they were yours. HMRC also publishes its own checker, "Work out pay from an umbrella company", which is the authoritative second opinion for a single current-year role. Reconciling this page's figures against both is a ten-minute job that has recovered real money for people who did it.
Who decides whether I'm inside IR35?
For public sector clients and medium or large private ones, the client decides and must give you a Status Determination Statement setting out its reasoning, which you can dispute. Where the end client is a small private business the responsibility stays with your own company under the older Chapter 8 rules, and you make the assessment yourself. gov.uk's small-company test is failing two or more of three conditions: turnover over £10,200,000, balance sheet total over £5,100,000, and more than 50 employees. Worth knowing before you accept a determination: a blanket policy applied across a whole contractor population without looking at individual working practices is not a valid determination, and the client is required to take reasonable care.
Does being inside IR35 make me an employee with employment rights?
Inside IR35 is a tax status, not an employment-law status. Being taxed like an employee of the end client does not give you unfair dismissal protection, redundancy pay or a right to return from leave with them — which is the asymmetry contractors reasonably find infuriating. Through an umbrella the picture is different, because you genuinely are an employee of the umbrella company: statutory holiday, statutory sick pay, pension auto-enrolment, notice and continuity of employment all come from it. That is a real difference between the two inside-IR35 routes and a point in the umbrella's favour that the tax arithmetic on this page does not capture.
Authoritative sources
- HM Revenue & Customs — Working through an umbrella company
The legal order of deductions from assignment rate to gross pay to net pay, and the rule that contributions taken off gross pay must always be employee contributions. Last updated 17 September 2025.
- HM Revenue & Customs — PAYE rules for labour supply chains including umbrella companies
The 6 April 2026 reform moving responsibility for operating PAYE to the agency, or to the end client where there is no agency. Last updated 19 June 2026.
- HM Revenue & Customs — Understanding off-payroll working (IR35)
Deemed employment payment mechanics, Chapter 10 against Chapter 8, the Status Determination Statement, and confirmation that student loan repayments are not deducted by a deemed employer. Last updated 26 February 2026.
- HM Revenue & Customs — Rates and thresholds for employers 2026 to 2027
The 15% secondary Class 1 rate, the £5,000 Secondary Threshold and the 0.5% Apprenticeship Levy used in the employment-cost half of the waterfall.
- HM Revenue & Customs — Company Taxation Manual CTM03925: Marginal Relief
The (F × (U − A)) × (N ÷ A) formula with a standard fraction of 3/200 and an upper limit of £250,000, used for the outside-IR35 Corporation Tax line.
- Department for Business and Trade — Holiday pay and entitlement reforms
Rolled-up holiday pay at 12.07% for irregular-hours and part-year workers, its derivation from 5.6 leave weeks over 46.4 working weeks, and the separate-payslip-line requirement.
Important disclaimer
This calculator produces annualised estimates for the 2026/27 tax year using published HMRC figures. It is information, not regulated tax or financial advice. Real payroll assesses income tax and National Insurance for each pay period, so a weekly or monthly payslip will not reconcile penny-for-penny with an annual model — particularly for irregular working patterns, where the per-period Secondary Threshold makes the true employer National Insurance lower than shown. The umbrella margin is a commercial fee with no statutory figure; the default here is an industry estimate, not a rate. The tool assumes National Insurance category A, a standard tax code, a single role with no other income, no benefits in kind, and that all outside-IR35 profit is distributed in the year it is earned. It does not decide your IR35 status, which depends on your working practices and on the client’s determination. Check your Key Information Document, your payslip and HMRC’s own umbrella pay tool, and take advice from an accountant before relying on a figure to negotiate a rate.
Published by Kalcify · Last updated
Calculators are built against primary sources — government tax authorities (IRS, HMRC, CRA, ATO) for finance and the World Health Organization for health metrics. Updated when rates or rules change. View methodology and data sources.
Related Tools
More free calculators and tools you might find useful