IR35 & Umbrella Calculator
Calculate your take-home pay as a contractor working inside IR35 or through an umbrella company. See exactly how much of your day rate you'll actually receive.
Contract Details
Enter your IR35/umbrella contract details
46 weeks = 6 weeks holiday/gap
Typically £20-£35 per week
Full Breakdown (2025/26)
£500/day × 5 days × 46 weeks
Umbrella & Employer Costs
Your Deductions (PAYE)
Understanding IR35 & Umbrella Companies
- • Inside IR35: You're treated as an employee for tax purposes
- • Employer NI: Comes out of your contract rate, not paid on top
- • Holiday Pay: Accrued at 12.07% (5.6 weeks ÷ 46.4 working weeks)
- • Umbrella Margin: Typically £20-35/week for admin and payroll
- • Apprenticeship Levy: 0.5% for umbrellas with pay bill over £3m
Understanding IR35 and Umbrella Companies
What is IR35?
IR35 is tax legislation designed to combat tax avoidance by workers who supply their services through an intermediary (usually a limited company) but who would be classed as employees if they were engaged directly. If your contract is "inside IR35", you're taxed similarly to an employee, even though you work through your own company or an umbrella.
How Umbrella Companies Work
An umbrella company acts as your employer. They invoice the recruitment agency or end client for your work, then pay you as an employee after deducting:
- Umbrella margin: Their fee for providing the service (typically £20-35/week)
- Employer National Insurance: 15% on earnings above £5,000 (from April 2025)
- Employer pension: Minimum 3% auto-enrollment contribution
- Apprenticeship Levy: 0.5% for larger umbrella companies
Key Things to Know
Employer Costs Come From Your Rate
Unlike a permanent employee, employer NI and pension come out of YOUR contract rate, significantly reducing your take-home pay.
Holiday Pay
You're entitled to 5.6 weeks holiday. This is typically accrued at 12.07% and can be paid weekly, or saved and paid when you take time off.
No Expenses
Inside IR35 or via umbrella, you generally cannot claim travel and subsistence expenses tax-free (the "supervision, direction and control" test applies).
Pension Contributions
Auto-enrollment requires 3% employer and 5% employee contributions. You can opt out, but pension contributions reduce your taxable income.
Typical Retention Rates
Contractors inside IR35 typically retain between 55-65% of their gross contract value as take-home pay, depending on their day rate and circumstances:
| Day Rate | Annual Contract | Take-Home (approx) | Retention |
|---|---|---|---|
| £300 | £69,000 | ~£43,000 | ~62% |
| £500 | £115,000 | ~£66,000 | ~57% |
| £750 | £172,500 | ~£90,000 | ~52% |
Based on 5 days/week, 46 weeks/year, standard pension contributions, no student loan.