GeraJobs / Contractor vs Permanent
Contractor vs Permanent — Net Pay Compared (2026/27)
How much more do you actually keep contracting outside IR35 versus a permanent PAYE job? Real HMRC 2026/27 Income Tax, NI, Corporation Tax and dividend rates.
Contractor vs permanent: how much more do you keep contracting outside IR35 in the UK (2026/27)?
On £60,000 of equivalent income, a permanent employee keeps £45,357 after PAYE tax and NI, while an outside-IR35 contractor (£12,570 salary + dividends, 19% Corporation Tax) keeps about £46,857 — a difference of £1,500. Real HMRC rates (OGL v3.0). Simplified model, not tax advice.
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Extra net pay an outside-IR35 contractor keeps vs a permanent employee on the same equivalent income, before expenses and lost benefits. Real HMRC 2026/27 rates.
How this is calculatedContractor vs Permanent Net Calculator (2026/27)
Compare permanent PAYE take-home with an outside-IR35 contractor net (£12,570 director's salary + dividends after 19% Corporation Tax), on real HMRC 2026/27 rates.
Permanent (PAYE)
£45,357
net a year
Contractor (outside IR35)
£46,857
net a year — incl. £9,012 Corp Tax, £4,131 dividend tax
A contractor keeps £1,500 more a year on these figures — but loses holiday, pension, sick pay and job security, and carries accountancy and IR35 risk.
Simplified model on real HMRC 2026/27 rates. Ignores expenses, VAT, accountancy fees, pension contributions and IR35 status determination. Not personal tax or financial advice.
Net pay by equivalent income
| Equivalent income | Permanent (PAYE) | Contractor (outside IR35) | Difference |
|---|---|---|---|
| £30,000 | £25,120 | £25,224 | +£104 |
| £35,000 | £28,720 | £28,839 | +£119 |
| £40,000 | £32,320 | £32,453 | +£133 |
| £45,000 | £35,920 | £36,068 | +£148 |
| £50,000 | £39,520 | £39,683 | +£163 |
| £55,000 | £42,457 | £43,297 | +£840 |
| £60,000 | £45,357 | £46,857 | +£1,500 |
| £65,000 | £48,257 | £49,459 | +£1,202 |
| £70,000 | £51,157 | £52,062 | +£905 |
| £75,000 | £54,057 | £54,664 | +£607 |
| £80,000 | £56,957 | £57,266 | +£309 |
| £90,000 | £62,757 | £62,470 | −£287 |
| £100,000 | £68,557 | £67,674 | −£883 |
| £120,000 | £75,914 | £78,083 | +£2,169 |
Simplified model: ignores expenses, VAT, accountancy fees, pension and IR35 status. Not personal tax advice.
Contractor vs permanent — FAQ
- How much more do you keep contracting outside IR35 vs permanent?
- On £60,000 of equivalent income, a permanent employee keeps £45,357 after PAYE, while an outside-IR35 contractor on a £12,570 salary plus dividends keeps about £46,857 — roughly £1,500 more. This ignores expenses, accountancy and the loss of holiday/pension/sick pay. Real HMRC rates (OGL v3.0).
- How is the contractor net calculated?
- A £12,570 director’s salary (covered by the Personal Allowance, no Income Tax or employee NI), with the remaining company profit paid as dividends after 19% Corporation Tax. Dividends above the £500 allowance are taxed at 10.75% (basic), 35.75% (higher) and 39.35% (additional). This is the standard structure, on real GOV.UK rates — but a simplified model, not advice.
- Is contracting always better than a permanent job?
- No. Higher net pay must be weighed against losing paid holiday, employer pension contributions, sick pay and job security, plus accountancy fees, IR35 risk and income gaps between contracts. The calculator shows the pay difference only; the rest is judgement.
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Sources: HMRC — Income Tax + Class 1 employee NI 2026 to 2027; GOV.UK — Corporation Tax rates (19% small profits) and Tax on dividends (£500 allowance; 10.75% / 35.75% / 39.35%). All Open Government Licence v3.0. A simplified model, not personal tax advice.