Contractor Calculator
£400 Day Rate Take-Home Pay UK (2026/27) — The Most Common Contractor Rate
On a £400/day rate working 232 days per year, your gross annual income is £92,800. Outside IR35 through a limited company, you’ll take home £61,810 in 2026/27. Inside IR35, that drops to £55,399. Through an umbrella company, expect £55,709. The permanent-equivalent salary is roughly £75,000–£80,000 once you account for employer pension, holiday pay, and benefits.
Key facts: £400/day (232 working days, 2026/27)
- Annual gross: £92,800
- Ltd company (outside IR35): £61,810 take-home
- Inside IR35: £55,399 take-home
- Umbrella company: £55,709 take-home
- Permanent equivalent: ~£75,000–£80,000
- Ltd company advantage over umbrella: £6,101/year
Calculate your exact take-home pay at £400/day →
Full deduction waterfall: Ltd company outside IR35
Here’s exactly where your money goes at £400/day through a limited company, taking an optimal salary of £12,570 with the rest as dividends.
| Step | Amount |
|---|---|
| Gross income (£400 × 232 days) | £92,800 |
| Less: director salary | −£12,570 |
| Less: employer NI on salary (15% above £5,000) | −£1,136 |
| Company profit | £79,095 |
| Less: Corporation Tax (marginal relief) | −£17,210 |
| Distributable profit (= dividends) | £61,884 |
| Less: dividend tax | −£12,645 |
| Income tax on salary | £0 |
| Employee NI on salary | £0 |
| Annual take-home pay | £61,810 |
The Corporation Tax rate at £79,095 profit sits in the marginal relief band (between £50,000 and £250,000). The effective rate is 21.8% — higher than the small profits rate of 19% but below the full 25% rate.
Your dividend tax breaks down as:
- £37,200 at the basic rate (10.75%) = £3,999
- £24,184 at the higher rate (35.75%) = £8,646
- First £500 covered by the dividend allowance = £0
At £400/day, roughly 39% of your dividends fall into the higher-rate band. This is lower than at £500/day (52%), which means the dividend tax increase from April 2026 hits you slightly less at this rate.
All structures compared
| Ltd (outside IR35) | Inside IR35 | Umbrella | PAYE permanent (£75k) | |
|---|---|---|---|---|
| Gross / salary | £92,800 | £92,800 | £92,800 | £75,000 |
| Employer NI | £1,136 | £10,847 | £10,927 | Paid by employer |
| Corporation Tax | £17,210 | — | — | — |
| Income tax | £0 (salary) | £18,357 | £18,571 | £17,432 |
| Employee NI | £0 | £3,557 | £3,568 | £3,511 |
| Dividend tax | £12,645 | — | — | — |
| Umbrella margin | — | — | £1,300 | — |
| Take-home | £61,810 | £55,399 | £55,709 | £54,057 |
The Ltd company advantage over an umbrella is £6,101 per year. After accountancy fees (typically £1,500–£2,500) and professional indemnity insurance (~£300), the net benefit is roughly £3,300–£4,300.
These are standard assumptions. Your situation will differ based on expenses, pension contributions, and student loans. Model your exact numbers →
What does £400/day equal as a permanent salary?
This is the question every contractor (and their partner) wants answered. But it’s not straightforward — permanent employees get benefits that contractors don’t.
| Benefit | Typical value at £75k permanent |
|---|---|
| Employer pension (5–8%) | £3,750–£6,000 |
| Holiday pay (28 days) | Already included in salary |
| Sick pay | Varies, but ~£2,000 value |
| Employer NI (paid for you) | £9,511 |
| Training and development | £1,000–£3,000 |
| Total benefits value | ~£16,000–£21,000 |
A permanent employee on £75,000 takes home £54,057 — but receives roughly £16,000–£21,000 in additional benefits. A contractor on £400/day outside IR35 takes home £61,810 but gets none of those benefits and takes on bench-time risk.
The honest comparison: a £400/day outside-IR35 contractor is financially equivalent to a permanent employee earning approximately £75,000–£80,000, depending on the employer’s benefits package. Inside IR35 or through an umbrella, the equivalent drops to roughly £65,000–£70,000.
The IR35 impact at £400/day
The difference between inside and outside IR35 at this rate is £6,411 per year — or £534 per month.
| Outside IR35 | Inside IR35 | Difference | |
|---|---|---|---|
| Take-home pay | £61,810 | £55,399 | £6,411 |
| Effective tax rate | 33.4% | 40.3% | +6.9pp |
The gap is driven primarily by employer NI. Inside IR35, £10,847 of your fee goes to employer NI — compared to just £1,136 outside IR35. That single line item accounts for most of the difference.
If you’re weighing up an inside-IR35 contract at £400/day, the take-home of £55,399 is equivalent to a permanent salary of roughly £65,000–£70,000. Whether that’s worth it depends on the contract length, your bench-time expectations, and how much you value the flexibility of contracting.
Tax planning at £92,800 income
At £400/day, your gross income of £92,800 puts you below the £100,000 personal allowance taper threshold — which is good news. You don’t face the 60% effective tax rate that hits contractors earning over £100,000.
But there are still things worth doing:
Pension contributions
Employer pension contributions from your limited company are Corporation Tax deductible, not subject to NI, and don’t count as personal income. At £400/day, a £10,000 employer pension contribution would save roughly £3,700 in combined Corporation Tax and dividend tax compared to extracting the same amount as dividends.
See how pension contributions affect your take-home →
Timing dividends around the tax year
With £61,884 in dividends, roughly £24,184 falls into the higher rate band at 35.75%. If you can defer some dividend payments to the next tax year (particularly if you expect lower income), you’ll keep more in the basic rate band at 10.75%.
Allowable expenses
At this income level, every pound of allowable expenses reduces your Corporation Tax bill. Common claims: accountancy fees, professional subscriptions, travel to temporary workplaces, home office costs (£6/week without receipts or actual costs with evidence), equipment, and training courses relevant to your work.
When you’ll hit the higher-rate threshold mid-year
On £400/day, your cumulative income crosses the higher-rate threshold (£50,270) around month 7 of the tax year. From that point, additional dividends are taxed at 35.75% rather than 10.75%.
This matters for cash flow planning: your effective monthly dividend tax rate is lower in the first half of the tax year and higher in the second half. If you’re planning large purchases or lump-sum pension contributions, earlier in the tax year may be more efficient.
Plan your monthly income breakdown →
Frequently asked questions
How much tax do I pay on a £400 day rate?
On a £400/day rate (£92,800 gross) outside IR35 through a limited company in 2026/27, your total tax bill is approximately £30,990 — made up of £17,210 in Corporation Tax and £12,645 in dividend tax (plus £1,136 in employer NI). Your effective tax rate is 33.4%. Inside IR35, the total tax burden rises to approximately £37,401, an effective rate of 40.3%.
What’s the permanent equivalent of a £400 day rate?
A £400/day contractor outside IR35 taking home £61,810 is roughly equivalent to a permanent employee on £75,000–£80,000, once you account for employer pension contributions, holiday pay, sick pay, and other benefits. Inside IR35, the equivalent drops to approximately £65,000–£70,000.
Is £400 a day a good contractor rate in 2026?
£400/day is the most commonly advertised contractor rate in the UK, particularly for mid-level developers, business analysts, project managers, and IT consultants. Outside IR35, it provides take-home pay of £61,810 — comfortably above the UK median salary. It’s a solid rate for contractors with 3–7 years of experience, though senior specialists in high-demand areas (cloud, AI, security) typically command £500–£700+.
Should I use a limited company or umbrella at £400 a day?
If you’re outside IR35, a limited company saves you roughly £6,101 per year over an umbrella. After accountancy fees and insurance (~£2,000), the net benefit is around £4,000. At this rate, the limited company route is worthwhile if you expect to contract for more than a year. If you’re inside IR35, the difference between Ltd and umbrella is marginal — an umbrella may be simpler.
How does the 2026/27 dividend tax increase affect £400/day contractors?
The 2pp dividend tax increase from April 2026 costs a £400/day contractor approximately £1,228 per year. Your basic rate dividends (£37,200) are now taxed at 10.75% instead of 8.75%, and higher rate dividends (£24,184) at 35.75% instead of 33.75%. See the full impact →
Ready to see your exact take-home pay at £400/day? Use our free Take-Home Pay Calculator — it uses the latest 2026/27 tax rates and compares all four employment structures side by side.