Contractor vs Permanent
Which path puts more money in your pocket?
What This Calculator Does
This calculator compares the total financial package of a permanent role (including pension, holiday, sick pay) against a contracting day rate to help you make an informed decision. It is designed for professionals deciding between contracting through a limited company and permanent employment.
How the Calculation Works
Outside IR35, your limited company pays you a £12,570 director's salary (employer NI at 15% above £5,000; a one-director company cannot claim the Employment Allowance), deducts your business costs, pays corporation tax (19% on profits up to £50,000, 25% above £250,000, with marginal relief in between) and pays the rest out as dividends, taxed at 10.75%, 35.75% and 39.35% after the £500 dividend allowance. Inside IR35, the fee-payer deducts employer NI (15% above £5,000) and the rest is taxed as salary through PAYE. The permanent side is your salary after income tax and National Insurance, plus your employer's pension contribution and your bonus after tax at your marginal rate.
All figures use 2026/27 rates for England, Wales and Northern Ireland and match our IR35 calculator. Holiday is shown for reference only: a salary already pays for those days, while the contractor figure assumes you are paid only for the days you work. Not modelled: student loans, your own pension contributions, the apprenticeship levy, sick pay and other benefits.
Common Scenarios
A £60,000 permanent salary with a 5% employer pension is worth £48,357 a year after tax (£45,357 take-home plus £3,000 of pension). Over 220 working days, a contractor needs about £315 a day outside IR35 (with £5,000 of business costs) or £337 a day inside IR35 to match it. At the calculator's defaults (£500 a day outside IR35, against a £65,000 salary with a 5% pension and a £3,000 bonus), the contractor keeps £67,571 and the permanent package is worth £53,247.
Related Calculators
You might also find these useful: Ir35, Umbrella, Self Employed, Dividend Tax. Or use our main salary calculator for a complete take-home pay breakdown.
Changing Jobs This Tax Year?
Most wrong tax codes start at a job change. These are the four pages that explain how the handover is supposed to work.