How this is calculated
This calculator runs the same contract value through both an outside IR35 limited company structure, with salary, expenses and dividends, and an inside IR35 deemed payment calculation, where employer NIC is deducted from the contract value before income tax and employee NIC apply to the remainder as if it were ordinary salary. The difference between the two net figures is the direct cash impact of a status change, all else being equal.
The calculator also estimates the gross rate increase that would be needed to leave you financially neutral if a contract moves from outside to inside IR35, which is a genuinely useful starting point when negotiating a revised rate with an agency or client following a status review.
Why status reviews happen mid-contract
End clients sometimes reassess IR35 status when a contract is extended, when working practices change, such as gaining a right of substitution or increased autonomy, or simply as part of a wider compliance review following HMRC guidance updates. A change in status is not retrospective for genuinely new determinations made in good faith going forward, but it does mean future payments are taxed differently from that point.
Clients occasionally propose a rate uplift to compensate contractors moving from outside to inside IR35, since the fee-payer's employer NIC cost effectively transfers onto the contractor's side of the equation inside IR35, which this calculator's suggested rate rise attempts to quantify.
Responding to a status change
If you disagree with a status determination, the off-payroll working rules require the end client to have a status disagreement process you can use to challenge it, and it is worth doing so in writing with clear reasoning about your actual working practices. If the determination stands, negotiating the rate, moving to a different engagement, or accepting the lower net pay are the practical options, and this calculator gives you the numbers to support that conversation.
It is also worth reviewing whether continuing through your own limited company still makes sense for an inside IR35 engagement, since an umbrella company often removes the ongoing cost and administrative burden of running a company for no tax difference in that scenario.
What this means for your company
Treat the result as a planning figure for the 2026/27 tax year. If it changes what you were about to do, take a director's salary, a dividend, a large asset purchase or a filing decision, check it against your own accounts first. We can review the position with you and confirm the tax treatment before you commit.
Frequently asked questions
Can my contract be moved from outside to inside IR35 partway through?
Yes, if the end client reassesses the working practices and issues a new status determination, future payments under the contract are taxed under the new status from that point, though past payments made under a reasonably held determination are not usually reopened.
Should I ask for a rate rise if my contract moves inside IR35?
Many contractors do negotiate an uplift to reflect the extra tax burden of a deemed payment, since the client no longer bears the employer NIC cost the same way; this calculator's suggested rate rise gives a starting figure for that conversation.
Can I challenge an IR35 status determination I disagree with?
Yes, the off-payroll working rules require medium and large end clients to operate a client-led status disagreement process, and you can submit your reasons for disagreeing, though the client is not obliged to change its determination.
Does a status change affect contracts already completed?
Generally no, a new determination applies to future payments from the point it is made, provided the original determination was made with reasonable care; it does not usually reopen tax already correctly accounted for on completed work.