UK IR35 Deemed Salary Calculator for Contractors (Estimator)
A concise estimator for calculating 'deemed salary' used for IR35 (off-payroll working) assessments. This tool provides an indicative figure based on contract payments and clearly states assumptions and limitations.
- Page updated:
- Jul 14, 2026
- Tool version:
- v1.1.0
Overview
Estimate the IR35 deemed direct payment for an inside-IR35 contract: the salary that must be taxed through PAYE after expenses, pension and employer's NIC are removed.
Core inputs
Results
Deemed (employment) salary
$48,330.40
Employer's NIC
$6,669.60
Amount apportioned to salary + NIC
$55,000.00
5% admin allowance
$0.00
How to read the result
- What it means
- The displayed value is an estimate based on your inputs. It represents the calculated scenario under current assumptions, not a guaranteed amount.
- Next step
- Use the result as a starting point. Adjust parameters to compare scenarios and validate with a professional when needed.
- Calculation limits
- The model uses simplified formulas and cannot account for all variables in your specific case (local regulations, personal conditions, temporal changes).
Methodology
Start from gross contract income, subtract the 5% allowance (only if you still run the assessment), allowable expenses and employer pension.
The remainder funds both the deemed salary and employer's NIC.
Deemed salary = remainder / (1 + employer NIC rate); employer's NIC = remainder - deemed salary.
Glossary+−
- Deemed Salary
The employment income taxed through PAYE (income tax and employee NIC) when a contract is inside IR35. It is derived from the contract fee after the 5% allowance (where applicable), allowable expenses, pension and employer's NIC are removed — not the gross fee.
- IR35 (Off-payroll working)
UK tax rules to determine whether a contractor should be taxed as an employee or self-employed for income tax and National Insurance contributions.
- CEST
HMRC’s Check Employment Status for Tax online tool, intended to help determine IR35 status.
Key takeaways
This tool shows how an inside-IR35 fee splits into a deemed salary and employer's NIC after expenses and pension.
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Worked examples
£60,000 inside IR35
£60,000 income, £2,000 expenses, £3,000 pension, 13.8% employer NIC, no 5% allowance.
Interpretation
£55,000 funds salary and NIC: about £48,330 deemed salary and £6,670 employer's NIC.
Frequently asked questions
What is the deemed salary?
It is the amount treated as employment income and taxed through PAYE (income tax + employee NIC) when a contract is inside IR35.
Who pays the employer's NIC?
The fee-payer (agency or client) for off-payroll rules; the figure here shows how it is carved out of the contract value.
Sources & references
- HMRC — Check employment status for tax (CEST): https://www.gov.uk/guidance/check-employment-status-for-tax
- HMRC — Off-payroll working (IR35): https://www.gov.uk/guidance/ir35-for-agencies-and-intermediaries
- GOV.UK — Income Tax and National Insurance overview: https://www.gov.uk/income-tax-rates
Quality & oversight
- Author
- Ugo Candido, MBA
- Maintained by
- Ugo Candido, MBA
- Page updated
- Jul 14, 2026
- Tool version
- v1.1.0