Oil & gas contractor on £220,000

Personal Ltd Co. Outside IR35. 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

£93,567

Pension

£60,000

Effective rate

30.2%

Marginal rate

33.8%

Oil & gas contractor vs sole trader at £220,000 — what changes

The decision a oil & gas contractor faces at £220,000 of income for 2026/27 is rarely "which calculator do I use" — it is "which legal structure leaves the most money in my pocket after tax." This page resolves the question for one specific scenario by running the relevant engines side-by-side at build time, so every number that follows is reproducible from a single CSV row and the BracketMath source code.

On the Ltd Co route, the joint optimiser places £5,000 as salary, £117,675 as dividend, £60,000 as an employer pension contribution. Net cash to the director: £93,567. Pension contribution: £60,000.

On a sole-trader route at the same gross profit, the figures shift materially. Income tax + Class 4 NI take a bigger combined bite (no dividend-tax band, no corporation-tax shelter, no employer pension dodge) and the trader's pension contributions are personal — not deductible from the gross. For comparison numbers across all common profit levels, see the contractor tax guide.

For a complete walk-through of the optimisation for this specific scenario, see the comparison table further down this page.

The numbers, line by line

Optimum salary	£5,000
Optimum dividend	£117,675
Optimum pension	£60,000
Net cash (optimum)	£93,567
Net wealth (cash + pension)	£153,567
Rule-of-thumb net cash	£120,064
Rule-of-thumb net wealth	£120,064
Saving vs rule of thumb	£33,503
Effective rate on profit	30.2%
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 — Software contractor at £220,000 — 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

Does this include the High Income Child Benefit Charge?

No. HICBC is not in the engine. If you or your partner earn over £60,000 and either of you claims Child Benefit, HICBC tapers the Child Benefit at 1% for every £200 of income over £60,000, fully eroded at £80,000 (2026/27 thresholds). This adds an effective 11% marginal between £60,000 and £80,000 for a one-child household, ~22% for two children, etc.

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).

What does the "marginal rate" mean on this page?

It is the rate paid on the next £1 of gross income added to this scenario. For this row that figure is 33.8%. The marginal rate is always higher than the average effective rate — it is the right number for "is one more invoice worth it" decisions.

What happens to my pension at age 55 / 57?

From age 55 (rising to 57 from 6 April 2028 per the Finance Act 2021) you can access defined-contribution pensions. The first 25% of the pot is tax-free (the "Pension Commencement Lump Sum"), subject to the £268,275 Lump Sum Allowance. The remainder is drawable at your marginal income-tax rate — but you can phase it across decumulation years to keep most of it within the 20% basic-rate band.

Does it include Scottish income tax?

No. Scotland has its own income-tax band schedule (Starter 19% / Basic 20% / Intermediate 21% / Higher 42% / Advanced 45% / Top 48% for 2026/27). National Insurance and corporation tax are still set at UK-wide rates. A Scotland-specific batch of programmatic pages is planned but is not in this batch.

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.