Private dentist on £220,000

Personal Ltd Co. Age 50. 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%

The four tax mechanisms acting on this income

For a private dentist at £220,000 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. Above £100,000 of adjusted net income the allowance tapers at £1 lost for every £2 over the threshold, fully eroded at £125,140. At £220,000 of relevant income this row sits past the taper — no Personal Allowance.
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 £93,567 of net cash plus £60,000 into a pension, against £66,433 of taxes / NI / fees lost through the chain — an effective rate of 30.2%.

Where the optimal extraction sits

Corporation tax: £37,325 on £155,000 of post-pay profit.
Employer NI: £0 on the £5,000 salary (15% above the £5,000 Secondary Threshold).
Employee NI: £0 on the same salary (8% main band, 2% above £50,270).
Income tax: £754 on the salary (rUK bands, after personal allowance tapered above the £100,000 threshold).
Dividend tax: £28,354 on the £117,675 dividend (8.75% / 33.75% / 39.35% bands, stacked above salary).

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	7
Annual pension contribution (this row)	£60,000
Projected pot at 57 (5% real, single-path)	£488,521
Sustainable income @ 4% SWR	£19,541/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

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 disagrees with the £12,570 rule of thumb — it places the optimum salary at £5,000. Above £5,000 the marginal cost (employer NI + employee NI + income tax) exceeds the marginal saving in corporation tax + dividend tax.

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.