IR35 calculator
To help you understand the impact of IR35 on your income we’ve created this handy IR35 calculator. Simply enter your day rate to calculate the impact of IR35 on your monthly take home pay.
What is IR35?
IR35 was HMRC’s (then the Inland Revenue) response to the growing number of employees leaving their permanent roles, setting up their own businesses and then returning to perform their old role as a contractor to avoid paying tax and National Insurance at the higher rates. It aims to ensure that contractors working essentially as ‘disguised employees’ and the employer pays the same level of tax through PAYE and national insurance as if the contractor were an employee.
As of April 2017, IR35 has undergone some significant changes. These changes specifically impact independent professionals working in the public sector. The requirement for effectively applying PAYE and National Insurance Contributions (NICs) will pass from the independent professional to the public sector engager or sourcing agency. Public bodies will now need to decide if they are engaging a contractor that is legitimately self-employed or whether they should be subject to PAYE and NICs like any other employee. This change will mean many contractors will be brought within PAYE and NICs.
Hi, i am a contractor operating in the public sector using my ltd company. My employer wants to put me on IR35 and i earn £135.32 per day and claim expenses ( travel, transport, meals, purchased items for my business) i will loos out on all of this as i now have to be in an umbrella company. how much ore can i request as an increase for the loose? should i ask for them to take on some of my expenses?
Hi Irvine,
Using the IR35 calculator, you can add your expenses to your day rate to see how much your day rate under IR35 should be for you to maintain the same take-home pay. You could also speak with your ‘employer’ to see whether they would be able to reimburse you for travel expenses.