Plumber on £40,000

Sole Trader. Age 34. 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

£31,209

Pension

£0

Effective rate

17%

Marginal rate

26%

The four tax mechanisms acting on this income

For a plumber at £40,000 of gross income on the sole-trader 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 — at Class 4 rates of 6% (£12,570–£50,270) and 2% (above £50,270) on profits, plus the optional £179.40 Class 2 contribution to maintain a State Pension qualifying year.
The trading allowance — £1,000 flat deduction available in lieu of actual expenses (ITTOIA 2005 s.783A). The engine picks whichever produces lower taxable profits.

Run those four mechanisms in sequence and the bottom line for this row is £31,209 of net cash, against £6,791 of taxes / NI / fees lost through the chain — an effective rate of 17%.

The numbers, line by line

Turnover	£40,000
Taxable profits	£38,000
Trading allowance vs actual expenses	Actual expenses
Income tax	£5,086
Class 4 NI	£1,526
Class 2 NI (voluntary)	£179
Net cash (year)	£31,209
Net cash (monthly)	£2,601
Hours-equivalent at NLW (£12.21/hr)	2,556 hrs
Effective rate	17%
Same turnover as Ltd Co (no pension)	£30,570
Incorporate vs stay sole trader	£638 for staying sole trader

Why this scenario is different

Compared to the closest peer profile — Freelance designer at £40,000 — 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. Taxable profits change from £38,000 to £38,000 (after the trading-allowance / actual-expenses choice).

Questions this scenario raises

How does the Pension Annual Allowance taper work?

Above £260,000 of adjusted income, the £60,000 Annual Allowance reduces by £1 for every £2 over the threshold, down to a £10,000 floor at £360,000 of adjusted income. The taper bites later than the £100k Personal Allowance taper but is similarly punitive on pension contributions specifically.

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.

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).

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.

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.

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.