Tools / Freelance day rate calculator
What does your day rate actually pay?
Enter a freelance day rate, choose your contract structure, and see what genuinely lands in your bank account once HMRC, your accountant and your pension are paid.
Your annual take-home
On £500/day across 230 days, with the Limited Company (Outside IR35) structure.
How structures compare
Same day rate, working pattern and pension — different contract structures.
Limited Co. (Outside IR35)
£65,026
57% of gross
Umbrella
£61,790
54% of gross
Inside IR35 (PAYE)
£71,263
62% of gross
Where the money goes
Limited Co. (Outside IR35) — 2026/27 tax year.
| Gross contract revenue | £115,000 |
| Business expenses | £3,000 |
| Director salary | £12,570 |
| Employer NIC on salary | £1,136 |
| Company pension contribution | £6,000 |
| Profit before Corporation Tax | £92,295 |
| Corporation Tax | £20,708 |
| Dividends drawn | £71,586 |
| Income tax on salary | £0 |
| Employee NIC on salary | £0 |
| Dividend tax | £19,131 |
| Annual take-home | £65,026 |
How it works
The maths, explained plainly
What the calculator assumes
The calculator takes your annual gross contract revenue (day rate × working days), then applies the standard 2025/26 HMRC rates for your chosen structure. It assumes England, Wales or Northern Ireland tax bands — Scotland has its own rates. The director salary is set to £12,570, which is the tax-efficient optimal for most Ltd Company directors in this tax year.
What “Outside IR35” means
Outside IR35 means HMRC has determined — or you have determined via a contract review — that your engagement is genuinely one of self-employment. Your Ltd Company can retain profit, pay Corporation Tax, and distribute the remainder as dividends, which are taxed more favourably than salary. This is typically the most tax-efficient structure for genuine freelancers.
Why Umbrella deducts more
Umbrella companies act as your employer. Before paying you, they deduct their margin, Employer National Insurance, and the Apprenticeship Levy — all from your contract value. You then pay Employee NIC and Income Tax on what remains. The result is typically 10–15% less take-home than an Outside IR35 Ltd Company at the same day rate.
Why Direct PAYE is the simplest
Direct PAYE — usually seen when engaged directly by a public sector client Inside IR35 — treats your full contract revenue as salary. There are no dividends, no Corporation Tax, and no company administration. What you see is what you get: salary minus Income Tax and Employee NIC. Simple, but rarely the highest take-home.
Limitations
What this calculator doesn’t account for
These figures are a reliable guide, not a precise prediction. The following factors are not included — if any apply to you, consult a specialist accountant.
- —Scotland's income tax bands, which differ from rUK at every threshold
- —The £100,000 personal allowance taper — if your income exceeds this, your effective marginal rate rises sharply
- —Student loan repayments (Plans 1, 2, 4 and Postgraduate)
- —Salary sacrifice schemes beyond the pension input provided
- —Benefits in kind — company cars, private medical insurance, etc.
- —The High Income Child Benefit Charge if applicable
- —Marginal Corporation Tax relief in detail — the calculator uses the standard HMRC formula
- —Accountancy fees, which reduce the real-world advantage of a Ltd Company
I built this calculator because I’ve been through each of these structures personally — umbrella at the start, then Ltd Company Outside IR35 once my client base was stable. The difference in take-home at £500/day between umbrella and Outside IR35 Ltd is typically £8,000–£12,000 per year. That gap is real, and it compounds. If you’re unsure which structure is right for your situation, the single best investment is one session with a contractor-specialist accountant. This tool tells you the numbers; an accountant tells you the risk.
Courage
Founder, Surveyor Success