Data scientist contractor on £90,000

Personal Ltd Co. Outside IR35. Age 32. Pension preference: modest.

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

£49,013

Pension

£26,000

Effective rate

16.7%

Marginal rate

33.8%

Step by step: how the engine arrived at the bottom line

The joint optimiser ran a grid search over (salary, pension) — salary in £100 steps from £0 to £60,000, pension in £500 steps from £0 to the £60,000 Annual Allowance — and evaluated each combination through the full tax stack. Here is the step-by-step trace that produced the optimum for a data scientist contractor at £90,000 of company profit:

Salary chosen: £12,570. Sits between the £12,570 PA and the £50,270 higher-rate threshold (paying basic-rate income tax + main-band employee NI).
Employer NI on salary: £1,136 (15% above the £5,000 Secondary Threshold).
Pension chosen: £26,000 as an employer contribution — CT-deductible, no NI either side, no income tax until drawdown.
Pre-CT profit: £50,295 = company profit minus salary, minus employer NI, minus pension contribution.
Corporation tax: £9,578 (regime: marginal).
Dividend extraction: all post-CT profit paid out — £40,716.
Personal taxes: employee NI £0 on salary; income tax £0 on salary; dividend tax £4,273 on the dividend (after the £500 Dividend Allowance and stacked above salary in the band schedule).
Net cash: £49,013. Net wealth (cash + pension): £75,013.

The numbers, line by line

Optimum salary	£12,570
Optimum dividend	£40,716
Optimum pension	£26,000
Net cash (optimum)	£49,013
Net wealth (cash + pension)	£75,013
Rule-of-thumb net cash	£61,674
Rule-of-thumb net wealth	£61,674
Saving vs rule of thumb	£340
Effective rate on profit	16.7%
Marginal rate (next £1 dividend)	33.8%

Why this scenario is different

Compared to the closest peer profile — Software contractor at £90,000 — 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 much can I put into pension this year?

The 2026/27 pension Annual Allowance is £60,000. Below £260,000 of adjusted income the full £60,000 Annual Allowance is available. Carry-forward of unused AA from the last three tax years is available subject to membership-in-each-year rules.

Is the Employment Allowance available for a single-director company?

No. A company with only one director who is also the sole paid employee cannot claim the £10,500 Employment Allowance (HMRC manual ESM4017). For genuine multi-employee setups it is claimable and the optimiser can model it via the `claimEmploymentAllowance` flag.

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 £26,000 to pension — the largest tax shelter available to a director.

How is corporation tax calculated in this scenario?

The taxable post-pay profit falls in the £50,000–£250,000 "marginal-relief band". Corporation tax is computed as 25% of taxable profits minus marginal relief, producing an effective marginal rate of 26.5% on each pound between the two thresholds.

Are dividends "double taxed" because corporation tax was already paid?

Yes — but the dividend tax rates (8.75% / 33.75% / 39.35%) are set lower than the equivalent income-tax rates (20% / 40% / 45%) precisely to account for the corporation tax already paid at company level. The combined CT + dividend tax stack is usually still cheaper than the salary stack of income tax + employer NI + employee NI for any single £1, which is why the optimiser puts most extraction through dividends.

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.