Locum doctor on £130,000

Personal Ltd Co. 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

£51,935

Pension

£60,000

Effective rate

13.9%

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 locum doctor at £130,000 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: £60,000 as an employer contribution — CT-deductible, no NI either side, no income tax until drawdown.
Pre-CT profit: £56,295 = company profit minus salary, minus employer NI, minus pension contribution.
Corporation tax: £11,168 (regime: marginal).
Dividend extraction: all post-CT profit paid out — £45,126.
Personal taxes: employee NI £0 on salary; income tax £0 on salary; dividend tax £5,761 on the dividend (after the £500 Dividend Allowance and stacked above salary in the band schedule).
Net cash: £51,935. Net wealth (cash + pension): £111,935.

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%
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 — IT 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

Are charity donations modelled?

No, not directly. Gift Aid donations reduce adjusted net income (extending the basic-rate band) and are a legitimate way to reclaim the £100k taper marginal. The BracketMath engine does not model them automatically; subtract the gift-aided amount from the "other income" field if you want a closer match.

Should I take the £12,570 standard director salary?

For this row the optimiser settled on a salary very close to the £12,570 standard — confirming the rule of thumb works here.

What happens if I retain profit in the company instead of extracting it?

The optimiser models full extraction (max-extraction mode). Retaining profits inside the company defers the dividend-tax slice but pays corporation tax now. If the retained cash is invested at company-level the returns face corporation tax annually. If the company is later sold and qualifies for Business Asset Disposal Relief, retained profits can be extracted at 10% CGT — but BADR rules and the lifetime allowance keep tightening (currently £1m lifetime cap). For most contractors, extract now is the right call.

Are dividend tax rates rising in 2026/27?

No — the 8.75% / 33.75% / 39.35% rates were set in 2022 and have been held flat through 2026/27. The Dividend Allowance has been reduced from £2,000 (2022/23) to £500 (2024/25 onwards) which has the same effect as a ~£175 tax rise at any rate band. This figure is built into every dividend-related calculation on the site.

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.

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.