Question 1

What is the take-home pay for a £650/day contractor in 2026-27?

Accepted Answer

At £650/day (220 days = £143,000/year), inside IR35 take-home is £83,568/year. Outside IR35 via Ltd Co take-home is £88,854/year — £5,286 more.

Question 2

Is the personal allowance tapered at £650/day inside IR35?

Accepted Answer

Yes. At £143,000 gross inside IR35, the personal allowance is completely lost (tapered above £125,140). All income is taxed at 20% or 40% with no tax-free personal allowance, significantly reducing inside IR35 take-home.

Question 3

How is outside IR35 take-home calculated for £650/day?

Accepted Answer

Outside IR35 at £650/day: salary £12,570 (zero income tax/NI), remaining £130,430 profit after 19% corp tax above the £9,100 threshold. Dividends taxed at 10.75% basic and 35.75% higher rate. Total take-home £88,854.

Question 4

Did the dividend tax rate change in 2026?

Accepted Answer

Yes. From April 2026, the dividend ordinary rate rose to 10.75% (from 8.75%) and the higher rate to 35.75% (from 33.75%). This reduced outside IR35 take-home by approximately £1,000–£1,500/year at the £650/day level.

Question 5

Is IR35 status a choice for the contractor?

Accepted Answer

No. IR35 status is a legal determination. For public sector and medium/large private sector clients, the end client makes the determination via a Status Determination Statement (SDS). Contractors cannot simply opt for outside IR35.

Day Rate	Annual	Inside IR35	Outside IR35	Difference
£300/day	£66,000	£44,348	£49,211	+£4,863
£350/day	£77,000	£50,548	£55,932	+£5,384
£400/day	£88,000	£56,748	£62,653	+£5,905
£450/day	£99,000	£62,948	£67,893	+£4,945
£500/day	£110,000	£68,468	£73,134	+£4,666
£550/day	£121,000	£73,218	£78,374	+£5,156
£600/day	£132,000	£78,818	£83,614	+£4,796
£650/day	£143,000	£83,568	£88,854	+£5,286
£700/day	£154,000	£88,318	£94,094	+£5,776
£750/day	£165,000	£93,068	£99,334	+£6,266
£800/day	£176,000	£97,818	£104,574	+£6,756
£1000/day	£220,000	£117,818	£126,574	+£8,756

£650/Day Rate Take-Home 2026-27 — Inside vs Outside IR35

Day Rate Comparison — 2026-27

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