Marketing consultant on £120,000

Personal Ltd Co. Outside IR35. Age 40. 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

£46,831

Pension

£60,000

Effective rate

11%

Marginal rate

8.8%

How much tax does a marketing consultant on £120,000 actually pay in 2026/27?

Short answer: £13,169 per year — an effective rate of 11% on gross company profit.

What's in that number? For a Ltd Co director the figure is the sum of five lines: corporation tax (£8,796), employer NI (£1,136), employee NI (£0), personal income tax (£0) and dividend tax (£3,237). The optimiser placed £12,570 of salary, £37,499 of dividend and £60,000 of employer pension contribution to produce that figure — the lowest total in the searched grid.

What's the marginal rate on the next £1? 8.8%. This is the number that matters for "is one more invoice worth the cost in lost benefits / extra effort?" decisions — it is always higher than the average effective rate.

How does this compare to PAYE employment at the same gross? The PAYE figure for a £120,000 salaried employee in 2026/27 is roughly £51,600 of combined income tax + employee NI. The structure-specific savings come from where the deductions sit, not whether they sit anywhere — see the contractor tax guide for the side-by-side maths.

The numbers, line by line

Optimum salary	£12,570
Optimum dividend	£37,499
Optimum pension	£60,000
Net cash (optimum)	£46,831
Net wealth (cash + pension)	£106,831
Rule-of-thumb net cash	£76,282
Rule-of-thumb net wealth	£76,282
Saving vs rule of thumb	£30,549
Effective rate on profit	11%
Marginal rate (next £1 dividend)	8.8%

Why this scenario is different

Compared to the closest peer profile — DevOps contractor at £120,000 — 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.

How do I model my partner's income alongside mine?

BracketMath models a single tax entity — there is no joint-couple calculation. For couples, the practical approach is to run each partner separately and consider income-splitting strategies (employing the lower-earning spouse for genuine work performed, sharing dividends if both are shareholders, etc). The Ltd Co spousal share pattern is sketched in /guides/ltd-company-director-tax.

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).

What is the £500 Dividend Allowance and how is it used?

The first £500 of dividends in 2026/27 is taxed at 0%. It does not reduce taxable income — it sits as a 0% slice within the band schedule. So a basic-rate dividend recipient with £500 of dividends pays £0; with £600 of dividends pays 8.75% × £100 = £8.75. The £500 is consumed in band order (cheapest band first).

Is this calculation valid for the 2027/28 tax year?

Only partially. Thresholds (PA, basic-rate, higher-rate, NI thresholds) are frozen through April 2028 per the Autumn Budget 2024. Some rates may change at the Spring 2027 Budget. The figures here are accurate for 2026/27 and will be re-run after any future Finance Act changes — check the published-date footer of this 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.