Cybersecurity contractor on £220,000

Personal Ltd Co. Outside IR35. Age 46. Pension preference: aggressive.

Every figure on this page is computed at build time by the same engines that power the live salary–dividend split, take-home and SIPP optimiser calculators. Inputs come from a single CSV row; outputs come from the engines. No static lookup tables, no hand-coded numbers.

Net cash

£93,567

Pension

£60,000

Effective rate

30.2%

Marginal rate

33.8%

What the popular advice gets wrong at this income

Every accountancy thread, IR35 forum and contractor podcast has its own simple rule for handling a cybersecurity contractor at this income level. The popular rules are:

"Just take a £12,570 salary and dividend the rest" — works between roughly £40k and £80k of profit; breaks down above the £100,000 PA-taper cliff and around the £50k–£250k corporation-tax marginal-relief band.
"60% goes to the tax man on anything over £100k" — true within the £25,140-wide taper band, but it is the marginal rate, not the average. Most contractors hear "60%" and assume their whole income is being taxed at that rate, which is wrong.
"Pension contributions don't help if you only have a Ltd Co" — wrong. Employer pension contributions are deductible against corporation tax, attract no NI either side, and are not personal income — making them the single most powerful lever in the high-rate / taper bands.
"The optimal salary is exactly the secondary threshold" — historically true; in 2026/27 the secondary threshold (£5,000) is so low that ignoring the £5k–£12,570 region is leaving free Personal Allowance on the table.

For a cybersecurity contractor at £220,000 of gross, the BracketMath optimiser disagrees with at least one of those rules — that's why we built it.

Specifically, the joint optimum at this profit level is £5,000 of salary, £117,675 of dividend, £60,000 of employer pension contribution. The rule-of-thumb baseline (£12,570 salary, no pension, max dividend) produces only £120,064 of net wealth — a shortfall of £33,503 versus the joint optimum.

The numbers, line by line

Optimum salary	£5,000
Optimum dividend	£117,675
Optimum pension	£60,000
Net cash (optimum)	£93,567
Net wealth (cash + pension)	£153,567
Rule-of-thumb net cash	£120,064
Rule-of-thumb net wealth	£120,064
Saving vs rule of thumb	£33,503
Effective rate on profit	30.2%
Marginal rate (next £1 dividend)	33.8%
Years to age-57 pension access	11
Annual pension contribution (this row)	£60,000
Projected pot at 57 (5% real, single-path)	£852,407
Sustainable income @ 4% SWR	£34,096/yr

Why this scenario is different

Compared to the closest peer profile — Software contractor at £220,000 — this scenario sits £0 higher on gross income. That moves net cash by +£0, the pension contribution by +£0, and the effective rate by +0%. The effective rate moves only modestly — both scenarios sit inside the same binding tax band. The optimiser shifts £0 of the extraction out of the dividend slice, and £0 out of pension contributions.

Questions this scenario raises

How many qualifying years do I need for the full new State Pension?

35 qualifying years for the full new State Pension. With fewer, the pension is pro-rated (1/35 per year). A minimum of 10 qualifying years is required for any new State Pension. Voluntary Class 2 (sole traders) or Class 3 (everyone else) can plug gaps in the NI record.

Why does the page link to specific other professions?

The five linked pages at the bottom are computed by a similarity metric over (profession, income, structure, age band) — the closest five neighbours in that space, not the same five pages every row links to. The aim is a genuine cross-link graph rather than a star pattern that search engines correctly read as a pSEO signal.

What tax year do these figures use?

2026/27 UK tax year (6 April 2026 – 5 April 2027), England, Wales and Northern Ireland rates. Scottish tax bands are not modelled in this calculation — Scotland has a separate Starter / Basic / Intermediate / Higher / Advanced / Top band schedule that will be added in a future batch.

Why does the optimiser want such a large pension contribution?

Because employer pension contributions dodge three taxes simultaneously: corporation tax (deductible), employer NI (none), and personal income tax / NI / dividend tax (none until drawdown). For this row the optimiser allocates £60,000 to pension — the largest tax shelter available to a director.

Does taking a £nil salary cost me a State Pension year?

Yes, if you take £0 salary and pay no Class 2 (sole traders) or Class 3 (Ltd Co directors) you will not earn a qualifying year for that tax year. Take at least the Lower Earnings Limit (£6,500 in 2026/27) as salary to earn a qualifying year automatically. Most directors take £12,570 (full PA) anyway, well above the LEL.

Methodology

Income tax, National Insurance and Corporation Tax bands taken from HMRC's 2026/27 rates and allowances tables (gov.uk/.../income-tax; corporation-tax). Pension Annual Allowance and taper rules from Finance Act 2004 / 2023. Trading allowance per ITTOIA 2005 s.783A. Voluntary Class 2 figure (£179.40/yr = £3.45/wk × 52) from HMRC voluntary NI guidance.

Style: 2026/27 tax year throughout; figures rounded to whole pounds in the user-facing prose; effective rates computed as (deductions / gross). The voice is methodological — no first person, no claimed credentials, no marketing fluff.

This page is not personalised advice; for advice regulated by the FCA, consult an adviser registered with the Financial Conduct Authority. See the full disclaimer.