April 2026 tax changes for UK contractors

Three reforms landed between April 2025 and April 2026 that compounded to change the maths for nearly every UK contractor. Most existing calculators have not been updated. This guide walks through what changed, when, and what it means for your annual take-home.

The three changes

Employer National Insurance rose to 15% on 6 April 2025, with the secondary threshold falling from £9,100 to £5,000. For Limited Company directors paying themselves a £12,570 salary, this added approximately £1,135 in employer NI cost per year. For umbrella workers, the cost is absorbed in the assignment rate before PAYE is computed — meaning the gross salary they're taxed on is lower.

Dividend tax rose two percentage points on 6 April 2026. The basic rate moved from 8.75% to 10.75%, and the higher rate from 33.75% to 35.75%. The additional rate stayed at 39.35%. The dividend allowance (£500) is unchanged. For a typical Outside IR35 contractor at £115K gross taking the conventional £12,570 director salary, this rise alone adds approximately £1,500–£2,000 in personal dividend tax.

Umbrella Joint & Several Liability (JSL) rules took effect on 6 April 2026. HMRC's new rules reshape the umbrella supply chain by holding agencies and end clients jointly liable for unpaid PAYE and NI from non-compliant umbrellas. The IR35 small-company threshold also rose from £10.2m turnover to £15m, shifting status determination back to about 14,000 contractors who previously had clients making the call.

What this means for your take-home

The combined effect is significant. Run our contractor pay comparison calculator on your own numbers — for a typical £500/day contractor working 5 days × 46 weeks (£115K gross), the post-April-2026 figures look like this:

• Outside IR35 (Limited Company): approximately £72,300 net annual
• Inside IR35 (Umbrella): approximately £68,100 net annual
• Permanent salary at the same gross: approximately £74,300 net annual

The most striking finding: at the conventional £12,570 director salary with no pension contribution, permanent employment narrowly beats Outside IR35 Limited Company at most contractor income levels post-April-2026. This is not a bug in the engine — it's the consequence of the new dividend rates compounding with the corporation tax marginal band and the personal allowance taper above £100K.

This doesn't mean the Limited Company is dead. Pension contributions through the company, retained profit, and legitimate business expenses can flip the result back. But the default story has changed. If you've been on autopilot since 2024/25, you're likely paying more tax than you need to.

Where to verify the rates

Every rate referenced above is published in HMRC and gov.uk source documents. We list them on our sources page. The full breakdown of how each calculator computes its output is on the methodology page.

Try the numbers

The fastest way to see your specific picture is to type your day rate into the contractor calculator. Numbers update live across all three structures, and you can expand "show maths" on any column to see every step.