IR35 Off-Payroll Working Calculator 2026
Calculate IR35 deemed employment income and tax. Determine if you're inside IR35, calculate the 5% expenses allowance, NI contributions, and compare contractor vs employee take-home pay.
IR35 Deemed Employment Income Calculator
If your contract is inside IR35, your Personal Service Company (PSC) must calculate a 'deemed employment payment' — effectively treating income as PAYE. Use this to estimate your take-home pay.
Frequently Asked Questions
What is IR35?
IR35 (off-payroll working rules) targets contractors who work like employees but operate through a Personal Service Company (PSC) to pay less tax. If your contract is 'inside IR35', income is treated as employment income and taxed accordingly.
Who decides if I'm inside IR35?
For public sector and medium/large private sector clients (from April 2021), the client determines your IR35 status using a Status Determination Statement (SDS). For small private sector clients, the contractor still determines their own status.
What are the key IR35 tests?
The three main tests are: (1) Substitution — can you send a substitute? (2) Control — does the client control how, when and where you work? (3) Mutuality of Obligation — must the client offer work and must you accept? Being outside these tests suggests genuine self-employment.
What is the 5% expenses allowance?
The 5% allowance was a flat deduction from gross income to cover administrative costs. However, it was removed for public sector contracts from April 2017 and for medium/large private sector from April 2021. It only remains for genuinely small-company clients.
How much tax do contractors pay inside IR35?
Inside IR35 contractors pay income tax (20/40/45%) plus employee NI (8/2%) plus employer NI (15% from April 2025) — effectively the same as an employee. Effective tax rates can reach 60%+ of contract income at higher earnings.
Can I claim expenses inside IR35?
Yes — you can still deduct genuine business expenses (travel to non-client sites, equipment, professional subscriptions) from the deemed employment calculation. However, travel to your client's site is generally not allowable under IR35.
What is a CEST check?
CEST (Check Employment Status for Tax) is HMRC's free online tool to determine IR35 status. A CEST determination provides some protection if used accurately. Critics note CEST doesn't cover all scenarios and doesn't address mutuality of obligation.
What are the penalties for getting IR35 wrong?
HMRC can pursue unpaid PAYE, NI, interest, and penalties of up to 100% of unpaid tax for deliberate errors. Since April 2021, liability shifts to the client/fee payer if they make an incorrect SDS. Penalties can go back 6 years (or 20 years for deliberate evasion).