[ BracketMath ]

UK Tax Year 2026/27 · Personal Ltd Co · Optimiser

IT contractor on £130,000

Personal Ltd Co. Outside IR35. Age 42. 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

£51,935

Pension

£60,000

Effective rate

13.9%

Marginal rate

33.8%

How HMRC defines the band this income falls into

A it contractor at £130,000 of gross for 2026/27 — plus any other personal income that stacks below — falls into the gap between the PA taper and the additional-rate threshold. HMRC's published rules for this band are unchanged from the figures announced in the Autumn Budget 2024 (which froze all the major thresholds at their April 2021 levels until at least April 2028).

For reference, the 2026/27 boundary numbers as published by HMRC:

  • Personal Allowance: £12,570 (full PA — tapered above £100,000 adjusted net income).
  • Basic-rate band: £12,570 to £50,270 (20% income tax, 8.75% dividend tax).
  • Higher-rate band: £50,270 to £125,140 (40% / 33.75%).
  • Additional-rate band: above £125,140 (45% / 39.35%).
  • PA taper: £1 of PA lost per £2 over £100,000 adjusted net income, fully eroded at £125,140.
  • Employer NI: 15% above the £5,000 Secondary Threshold (Finance Act 2024).
  • Employee NI: 8% main band (£12,570–£50,270), 2% above.
  • Class 4 NI (sole traders): 6% main band, 2% above. Class 2 voluntary: £3.45/week (£179.40/yr).
  • Corporation Tax: 19% small profits rate (≤ £50,000), 25% main rate (≥ £250,000), 26.5% effective marginal in between.
  • Dividend Allowance: £500 at 0%.
  • Pension Annual Allowance: £60,000 (tapered to £10,000 above £260,000 adjusted income).

For this specific row, the binding constraints are: the corporation-tax marginal-relief band (26.5% effective marginal CT) on the company side, and the £100k Personal Allowance taper on the personal side.

The engine's computed bottom line for this row, given those binding constraints: net cash £51,935, pension £60,000, effective rate 13.9%, marginal rate 33.8%.

The numbers, line by line

Optimum salary £12,570
Optimum dividend £45,126
Optimum pension £60,000
Net cash (optimum) £51,935
Net wealth (cash + pension) £111,935
Rule-of-thumb net cash £80,972
Rule-of-thumb net wealth £80,972
Saving vs rule of thumb £30,963
Effective rate on profit 13.9%
Marginal rate (next £1 dividend) 33.8%

Why this scenario is different

Compared to the closest peer profile — Cloud architect contractor at £130,000 — 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

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.

Where does the BracketMath engine source its rates?

Income tax / NI / CT / dividend rates come from HMRC's published 2026/27 rate tables (gov.uk/government/publications/rates-and-allowances-income-tax). Pension rules come from FA 2004 and the FCA's consumer guidance. Historical investment returns used in the Monte Carlo engine come from a 125-year UK gilt + UK equity series stored in src/data/historical-returns.json. Every constant carries a source URL in the source code.

Closest peer profiles

Computed at build time by a weighted distance over profession, structure, persona, age band and gross income. Not the same five links on every page.

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.