Engineer on £60,000

Sole Trader. Age 42. Plus £20,000 of other personal income stacking below. 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

£40,928

Pension

£0

Effective rate

26.8%

Marginal rate

42%

The four tax mechanisms acting on this income

For a engineer at £60,000 of gross income on the sole-trader route in 2026/27, four mechanisms determine the bottom line:

The Personal Allowance — £12,570 of income at 0% income tax. This row sits below £100,000 of adjusted net income, so the full £12,570 PA is available.
The £50,270 higher-rate threshold — income tax jumps from 20% to 40% above this number. Dividend tax simultaneously jumps from 8.75% to 33.75%.
National Insurance — at Class 4 rates of 6% (£12,570–£50,270) and 2% (above £50,270) on profits, plus the optional £179.40 Class 2 contribution to maintain a State Pension qualifying year.
The trading allowance — £1,000 flat deduction available in lieu of actual expenses (ITTOIA 2005 s.783A). The engine picks whichever produces lower taxable profits.

Run those four mechanisms in sequence and the bottom line for this row is £40,928 of net cash, against £16,072 of taxes / NI / fees lost through the chain — an effective rate of 26.8%.

The numbers, line by line

Turnover	£60,000
Taxable profits	£57,000
Trading allowance vs actual expenses	Actual expenses
Income tax	£13,496
Class 4 NI	£2,397
Class 2 NI (voluntary)	£179
Net cash (year)	£40,928
Net cash (monthly)	£3,411
Hours-equivalent at NLW (£12.21/hr)	3,352 hrs
Effective rate	26.8%
Same turnover as Ltd Co (no pension)	£36,680
Incorporate vs stay sole trader	£4,247 for staying sole trader

Why this scenario is different

Compared to the closest peer profile — Freelance designer at £60,000 — this scenario sits £0 higher on gross income. That moves net cash by −£3,264, the pension contribution by +£0, and the effective rate by +5.4%. The shift in effective rate is large enough that the binding tax constraint has changed — probably crossing a band boundary. Taxable profits change from £57,000 to £57,000 (after the trading-allowance / actual-expenses choice).

Questions this scenario raises

Why do some columns of the table use cash and others use net wealth?

Net cash is the £ that arrive in your bank account. Net wealth includes pension contributions valued at face (£1 of pension = £1 of wealth, since it will eventually be spent — possibly at a lower marginal rate than today). The optimiser uses a `pensionWeight` parameter so the user can adjust the weight; this page sets it according to the row's `pensionPref` (0 / 0.5 / 1.0 for none / modest / aggressive).

Is the figure on this page net of accountancy fees?

Yes when relevant — the take-home calculator deducts an umbrella fee for inside-IR35 rows (£1,500/yr assumed) and the optimiser allows for an arbitrary annual business expense pot (£3,500/yr default for Ltd Co rows). Sole-trader rows assume the higher of £800/yr or 5% of turnover as actual business expenses, which approximates a low-overhead service business.

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.

What is the Personal Allowance and how is it used in this calculation?

The Personal Allowance is the first £12,570 of non-savings, non-dividend income on which no income tax is charged. It is consumed from the bottom up: salary first, then dividends. Above £100,000 of adjusted net income the allowance tapers at £1 lost for every £2 of income, fully eroded at £125,140 — producing the well-known 60% effective marginal rate inside that £25,140-wide band.

Why is the effective rate lower than the headline tax brackets?

Because the headline 20% / 40% / 45% rates apply only to the income slice in each band — not the whole income. The Personal Allowance shelters the first £12,570 at 0%; the basic-rate band only charges 20% on the next £37,700; and so on. The effective rate on the entire income is the weighted average of every slice — typically much lower than the headline number people quote.

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.