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| Outside IR35 | Inside IR35 | ||
|---|---|---|---|
| TOTAL TAXES: | £7,097 | £10,368 | |
| (Percentage of revenue) | (17%) | (25%) | |
| Revenue: | Total revenue | £41,250 | £41,250 |
| Personal Taxes: | Paye | £0 | £0 |
| Employees N.I. | £0 | £0 | |
| Dividend taxes | £1,350 | N/A | |
| Company taxes: | Employers N.I. | £0 | £0 |
| Corporation tax | £5,747 | N/A | |
| Taxes on Deemed Payment: | Additional Paye | N/A | £4,053 |
| Additional Employers N.I | N/A | £3,418 | |
| Additional Employees N.I. | N/A | £2,896 |
- Being caught by IR35 results in an extra tax burden of £3,270 (46% increase)
- The increase in taxes is mainly due to the additional employers and employees N.I., together with income tax being payable at full rate as opposed to a combination of corporation tax and dividend tax which is lower. You also lose the advantage of being able to split your dividends.
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