Inside vs Outside IR35: Comparing Real Take-Home Pay for Engineers
A plain-English guide to how inside and outside IR35 contracts compare on take-home pay for UK engineering and construction contractors.
The headline rate isn't the whole story
An outside-IR35 contractor working through a limited company typically pays corporation tax and takes a mix of salary and dividends. An inside-IR35 contractor is usually paid through an umbrella company, with income tax, employee and employer National Insurance and umbrella fees deducted.
That's why inside roles normally need a higher day rate to deliver similar take-home pay.
What to compare
Compare estimated annual take-home, not day rates. Factor in umbrella margins, pension contributions, expenses and how many days you'll actually work.
Use the calculator
Our IR35 comparison on each role page uses a simplified 2025/26 tax model. It's indicative only — actual take-home depends on engagement structure, tax position, umbrella fees, pension and individual circumstances. Always take professional advice for your own situation.