Project manager contractor on £110,000

Personal Ltd Co. Outside IR35. Age 38. 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

£39,440

Pension

£60,000

Effective rate

9.6%

Marginal rate

8.8%

What the popular advice gets wrong at this income

Every accountancy thread, IR35 forum and contractor podcast has its own simple rule for handling a project manager contractor at this income level. The popular rules are:

"Just take a £12,570 salary and dividend the rest" — works between roughly £40k and £80k of profit; breaks down above the £100,000 PA-taper cliff and around the £50k–£250k corporation-tax marginal-relief band.
"60% goes to the tax man on anything over £100k" — true within the £25,140-wide taper band, but it is the marginal rate, not the average. Most contractors hear "60%" and assume their whole income is being taxed at that rate, which is wrong.
"Pension contributions don't help if you only have a Ltd Co" — wrong. Employer pension contributions are deductible against corporation tax, attract no NI either side, and are not personal income — making them the single most powerful lever in the high-rate / taper bands.
"The optimal salary is exactly the secondary threshold" — historically true; in 2026/27 the secondary threshold (£5,000) is so low that ignoring the £5k–£12,570 region is leaving free Personal Allowance on the table.

For a project manager contractor at £110,000 of gross, the BracketMath optimiser disagrees with at least one of those rules — that's why we built it.

Specifically, the joint optimum at this profit level is £12,570 of salary, £29,399 of dividend, £60,000 of employer pension contribution. The rule-of-thumb baseline (£12,570 salary, no pension, max dividend) produces only £71,413 of net wealth — a shortfall of £28,027 versus the joint optimum.

The numbers, line by line

Optimum salary	£12,570
Optimum dividend	£29,399
Optimum pension	£60,000
Net cash (optimum)	£39,440
Net wealth (cash + pension)	£99,440
Rule-of-thumb net cash	£71,413
Rule-of-thumb net wealth	£71,413
Saving vs rule of thumb	£28,027
Effective rate on profit	9.6%
Marginal rate (next £1 dividend)	8.8%

Why this scenario is different

Compared to the closest peer profile — Software contractor at £110,000 — 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

What if I have rental income alongside this self-employment?

Add it to the `otherIncome` field of the calculator. Property income is taxed at non-savings, non-dividend rates (so stacks alongside salary in the band schedule). The first £1,000 of rental income can also be sheltered by the separate Property Allowance under FA 2017 s.16.

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.

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.

Does this calculation include student loan repayments?

No. Student Loan repayments (Plan 1 / 2 / 4 / 5 / Postgraduate) are not modelled in the BracketMath engines. Plan 2 repayments at 9% above £27,295 add roughly 9p of marginal cost to each £1 of taxable income above the threshold. Add this to the marginal rate quoted on this page if you have an outstanding student loan.

Does taking a £nil salary cost me a State Pension year?

Yes, if you take £0 salary and pay no Class 2 (sole traders) or Class 3 (Ltd Co directors) you will not earn a qualifying year for that tax year. Take at least the Lower Earnings Limit (£6,500 in 2026/27) as salary to earn a qualifying year automatically. Most directors take £12,570 (full PA) anyway, well above the LEL.

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.