IR35 Status Checker and Calculator

Use the IR35 status checker above

Answer the questions in the tool above about how you actually work day to day. It weighs the key status tests and returns an indication of whether your contract looks inside or outside IR35, plus the rough take-home difference. Treat the result as a guide to inform a proper review, not a binding HMRC determination.

How the IR35 calculator works

IR35 is not decided by one clause in your contract. HMRC and the courts look at the reality of the engagement and weigh several tests together. There is no single formula that spits out a yes or no, so this checker scores your answers against the factors that case law treats as decisive, then leans toward inside or outside based on where the weight falls.

The three pillars do most of the heavy lifting:

• Personal service vs substitution. If you must do the work personally and the client would refuse a qualified substitute, that points inside IR35. A genuine, unfettered right to send a substitute (and pay them yourself) points outside.
• Control. The more the client dictates what you do, how you do it, when and where, the more it looks like employment. A contractor who decides their own method and hours looks outside.
• Mutuality of obligation (MOO). If the client is obliged to offer work and you are obliged to accept it on a rolling basis, that is an employment hallmark. A project with a defined deliverable and no obligation beyond it points outside.

Secondary factors then tip the balance: do you take real financial risk, provide your own equipment, work for several clients, correct defective work at your own cost, and sit outside the client's staff structure (no line management, appraisals, or staff perks)? The checker turns each answer into a weighting, the same way an experienced adviser or HMRC's own CEST tool would reason through it.

For the money side, the rule of thumb is simple. Outside IR35, you can run the usual limited-company mix of a small salary plus dividends, so your effective tax rate is typically lower. Inside IR35, the fee is treated as deemed employment income: income tax and National Insurance apply broadly as if you were on payroll, wiping out most of the dividend advantage. You can model both sides with our limited company tax calculator and our dividend vs salary calculator.

Worked example: outside vs inside on a 500 per day contract

Take Priya, a contractor billing 500 per day through her own limited company, on a six-month engagement of roughly 220 billed days, so about 110,000 of fee income in the year. Assume modest expenses for simplicity.

Outside IR35. Priya pays herself a small salary around the National Insurance primary threshold and takes the rest as dividends after corporation tax. Because dividends are taxed at lower rates than salary and carry no National Insurance, her overall take-home rate on the profit is meaningfully higher than an employee on the same headline figure. The exact split depends on her salary level and dividend draw, which is why modelling it with a contractor calculator matters before you commit.

Inside IR35. The same 110,000 is treated as deemed employment income. After the fee-payer deducts income tax and employee National Insurance (8% between 12,570 and 50,270, then 2% above), Priya keeps far less. As a rough comparison, a contractor moving the same gross from outside to inside IR35 commonly loses somewhere in the region of 20% to 25% of net take-home, because the dividend route is closed and salary-level NI bites. That gap is the whole reason status is worth getting right.

Worked example: the substitution test in practice

Two contractors, same client, same 450 day rate. Tom's contract says he can send a substitute, but in the interview the client said "we need you specifically and HR would never let anyone else badge in." In reality there is no substitution right, so this factor points inside. Sarah's contract also allows substitution, and when she was ill she genuinely sent a vetted colleague through her company, invoiced the client as normal, and paid the substitute herself. Same clause, completely different outcome: Sarah's working reality points outside. This is the core lesson of IR35: what happens in practice beats what the paperwork claims.

Who decides your status, and why it matters who pays

Since April 2021, for medium and large private-sector clients (and all public-sector clients), the end client decides your IR35 status and the fee-payer (often the agency) deducts any tax. If the client is a small company in the private sector, the old rules still apply and the responsibility to assess status and pay any liability stays with your own limited company. Knowing which regime you sit under tells you who carries the risk if HMRC disagrees.

If you are inside IR35 and being paid through an umbrella, your money is run through PAYE before it reaches you. Compare that route with our umbrella company calculator so you know what actually lands in your account.

How to strengthen an outside-IR35 position

• Make the contract and reality match. A great contract with employee-like working practices will still fail. Align both.
• Keep a genuine right of substitution that the client would honour, not a clause everyone knows is fiction.
• Work to a defined deliverable rather than open-ended "business as usual" cover, and avoid being slotted into the org chart.
• Take real business risk: fixed-price elements, fixing defects at your own cost, your own equipment, professional indemnity insurance, and ideally more than one client.
• Avoid employee trappings: no staff appraisals, no company-paid training as a perk, no notice-period style commitments, no canteen pass treated as staff.
• Keep evidence. Confirmation-of-arrangements letters, a contract review, and records of how you actually worked are gold if HMRC asks.

HMRC publishes its own check employment status for tax (CEST) tool and detailed guidance, and you should run it and keep the output. See the official HMRC CEST tool and the wider off-payroll working (IR35) guidance on gov.uk. For independent, jargon-free background, MoneyHelper is a useful starting point.

Common mistakes contractors make with IR35

• Relying on the contract alone. Status is decided on working practices. A clause you never use carries little weight.
• Assuming "limited company" means "outside." Trading through a company does not exempt you; the engagement is judged on its substance.
• Treating CEST as final. CEST is HMRC's tool, but it does not test mutuality of obligation well and the result is only as good as your honest answers.
• Ignoring blanket determinations. Some clients declare every contractor inside to be safe. You can challenge a determination through the client's status disagreement process.
• Forgetting the small-company rule. If your end client is genuinely small, the liability sits with you, not them, so your own assessment still matters.
• Not budgeting for the tax difference. If a role flips inside, your take-home drops. Model it first with our contractor day rate calculator so you can negotiate a higher inside-IR35 rate if needed.

One regional note: IR35 itself is a UK-wide set of rules, but the income tax you pay if you are caught inside depends on where you live. Scottish taxpayers use Scotland's own income tax bands on their employment-type income, so an inside-IR35 contractor in Scotland may see a different deduction than one in England, Wales or Northern Ireland.

These figures are estimates for guidance only and are not personal tax or financial advice. IR35 status turns on the specific facts of each engagement; for a decision you can rely on, get a contract review or speak to a qualified adviser.

Related calculators for contractors

Once you know your likely status, work out the money. Try the self-employed tax calculator to see income tax and Class 4 National Insurance on your profits, and the take-home pay calculator to compare inside-IR35 PAYE deductions against an outside-IR35 salary-plus-dividend split.