Locum doctor on £90,000

Personal Ltd Co. Age 38. 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%

The four tax mechanisms acting on this income

For a locum doctor at £90,000 of gross income on the Ltd Co director 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 — on the salary slice only, at 8% employee + 15% employer above the relevant thresholds. The dividend slice attracts no NI — that is the central source of the Ltd Co tax-efficiency edge.
Corporation tax — 19% on profits up to £50,000, 25% on profits above £250,000, with a 26.5% effective marginal rate in the £50k–£250k band (HMRC marginal-relief formula).

Run those four mechanisms in sequence and the bottom line for this row is £49,013 of net cash plus £26,000 into a pension, against £14,987 of taxes / NI / fees lost through the chain — an effective rate of 16.7%.

Where the optimal extraction sits

Corporation tax: £9,578 on £50,295 of post-pay profit.
Employer NI: £1,136 on the £12,570 salary (15% above the £5,000 Secondary Threshold).
Employee NI: £0 on the same salary (8% main band, 2% above £50,270).
Income tax: £0 on the salary (rUK bands, after personal allowance).
Dividend tax: £4,273 on the £40,716 dividend (8.75% / 33.75% / 39.35% bands, stacked above salary).

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.