Inside vs outside IR35: the difference in pounds, not labels

What is the difference between inside and outside IR35, priced properly

1. Compare like rates, and say which rate. An assignment rate quoted for an inside engagement has to carry employer National Insurance and, through an umbrella, the umbrella's margin and holiday funding before your gross pay is set. Comparing that number with an outside day rate is comparing a cost to a client with income to a company.
2. Put the deductions side by side. Inside: Income Tax and employee National Insurance deducted by the deemed employer, with employer National Insurance and the Apprenticeship Levy paid by that employer, and your student loan settled separately through Self Assessment. Outside: corporation tax on company profit, then tax on the salary and dividends you draw.
3. Count the costs each route carries. Outside means accountancy, insurance, company filings and unpaid time between contracts. Inside through an umbrella means a margin per period and simpler administration. Those are real numbers and belong in the comparison rather than in a footnote about lifestyle.
4. Value what only one side gives you. An umbrella gives statutory employment rights including holiday and sick pay, funded from the assignment rate. An outside engagement gives control and the ability to make company pension contributions from gross profit. Neither is free and the choice is rarely only about the net figure.
5. Then run both on your own number. Take your rate, your expected billable weeks and your pension plan, and run the inside and outside calculators on this site on the same inputs. A difference expressed as a percentage of a rate you have not stated is a marketing claim rather than a comparison.

Common questions

How much more do you keep outside IR35?

It depends on the rate, the drawing plan, the pension contribution and the costs each route carries, which is why any single percentage quoted without those inputs is unreliable. Run both calculators on your own rate and billable weeks.

Is an umbrella always worse than a limited company?

No. On a modest rate, a short engagement, or where the alternative is running a company for one client, the umbrella can leave you similar money with far less administration and with statutory holiday and sick pay. On a high rate over a long period the company route usually wins.

Can one client's engagements be inside and another's outside?

Yes. Status is determined per engagement, so it is common to hold both at once. Each determination stands on its own facts, and running both is not evidence against either.

What is the biggest mistake in this comparison?

Comparing an inside assignment rate with an outside day rate as though they were the same number, and forgetting that a deemed employer does not deduct the student loan, which then arrives as a Self Assessment bill.

Take-home pay by jurisdiction

• Take-home pay in United Kingdom