UK Contractor Tax Calculator – Calculate Your Take-Home Pay Outside IR35
Understand Your Limited Company Tax Position & Compare with Permanent Salary
If you’re a UK contractor with a limited company operating outside IR35, your tax situation is significantly different from a standard PAYE employee. Unlike salaried employees who pay income tax and National Insurance (NI) at source via PAYE, contractors need to manage corporation tax, dividend tax, and personal tax effectively.
Income
Expenses
Distribution
| Item | Yearly | Monthly | Weekly |
| Company P&L | |||
| Revenue | £0.00 | £0.00 | £0.00 |
| £0.00 | £0.00 | £0.00 | |
| Profit Before Tax | £0.00 | £0.00 | £0.00 |
| Corporation Tax | £0.00 | £0.00 | £0.00 |
| Profit After Tax | £0.00 | £0.00 | £0.00 |
| Distributions | £0.00 | £0.00 | £0.00 |
| Retained Profit | £0.00 | £0.00 | £0.00 |
| Personal Income | |||
| Gross Pay | £0.00 | £0.00 | £0.00 |
| Dividends | £0.00 | £0.00 | £0.00 |
| Total | £0.00 | £0.00 | £0.00 |
| Personal Taxes | |||
| Personal Allowance | £12,570.00 | £1,047.50 | £241.73 |
| £0.00 | £0.00 | £0.00 | |
| £0.00 | £0.00 | £0.00 | |
| £0.00 | £0.00 | £0.00 | |
| Total | £0.00 | £0.00 | £0.00 |
| Take Home Pay | £0.00 | £0.00 | £0.00 |
| Pension Contributions | £0.00 | £0.00 | £0.00 |
| Total Compensation | £0.00 | £0.00 | £0.00 |
About this Calculator
Our UK Contractor Tax Calculator helps you:
- Estimate your take-home pay after tax and expenses.
- Understand corporation tax and how your limited company is taxed.
- Calculate dividend tax and how much you can withdraw tax-efficiently.
- Factor in pension contributions and expenses to reduce tax liability.
- Compare with permanent employment to determine an equivalent salary.
How is Contractor Tax Different from PAYE Employees?
When you work as a contractor outside IR35, your earnings are structured differently compared to a standard salary:
| Aspect | Contractor (Ltd. Co, Outside IR35) | PAYE Employee |
| Income Source | Day rate via invoices | Fixed salary via employer |
| Tax Payments | Corporation Tax (19-25%), Dividend Tax, National Insurance, PAYE on salary | Income Tax & National Insurance deducted at source |
| National Insurance | Only on salary portion | Both Employee & Employer NI applies |
| Dividends | Tax-efficient way to pay yourself | Not applicable |
| Expenses | Can claim business expenses | Limited ability to claim expenses |
| Pension Contributions | Tax-deductible for company | May or may not be subject to NI |
| Holiday Pay & Benefits | None – must be self-funded | Provided by employer |
How Your Tax is Calculated
- Company Profits & Corporation Tax – After deducting business expenses, salary, and pension contributions, the company pays 19%-25% corporation tax on remaining profits.
- Dividends & Dividend Tax – Profits after tax can be withdrawn as dividends, subject to dividend tax rates.
- Salary & PAYE Tax – Salaries paid from the company are subject to Income Tax and Employee’s National Insurance, but can reduce corporation tax.
- National Insurance Contributions (NICs) – Only applies to the salary, not dividends.
Comparing Contracting vs. a Permanent Salary
One of the biggest decisions for contractors is whether to stay independent or return to permanent employment. Our calculator shows what equivalent salary you’d need in a permanent role to match your current contract earnings, after factoring in tax and benefits.
Maximising Your Take-Home Pay
- Use pension contributions – These reduce corporation tax and provide tax-free growth.
- Balance salary & dividends – A tax-efficient mix optimises take-home income.
- Claim allowable expenses – Business-related costs lower taxable profit.
- Plan ahead for IR35 – If moving between inside/outside IR35 contracts, understand tax impacts.