Software contractor on £100,000

Personal Ltd Co. Outside IR35. Age 38. 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

£49,013

Pension

£36,000

Effective rate

15%

Marginal rate

33.8%

Worked example: Software contractor, 38, £100,000 of company profit

Picture a software contractor aged 38 for the 2026/27 tax year, operating through a personal Ltd Co outside IR35, with £100,000 of profit before director pay. The optimisation goal for this profile is a balance of cash and pension contribution (modest pension preference, treating £1 of pension as £0.50 of cash for the search).

Running the engine for this exact profile:

Optimum salary: £12,570
Optimum dividend: £40,716
Optimum pension contribution: £36,000
Net cash to the director: £49,013
Net wealth (cash + pension): £85,013
Total tax + NI through the chain: £14,987 (15% effective on gross profit)
Money left on the table by the £12,570-salary rule of thumb: £470

The vignette is hypothetical but the numbers are not — every figure above was produced by the same engine code that powers the live BracketMath calculators, run at build time on inputs drawn from a single CSV row.

The numbers, line by line

Optimum salary	£12,570
Optimum dividend	£40,716
Optimum pension	£36,000
Net cash (optimum)	£49,013
Net wealth (cash + pension)	£85,013
Rule-of-thumb net cash	£66,543
Rule-of-thumb net wealth	£66,543
Saving vs rule of thumb	£470
Effective rate on profit	15%
Marginal rate (next £1 dividend)	33.8%

Why this scenario is different

Compared to the closest peer profile — Software contractor at £100,000 — this scenario sits £0 higher on gross income. That moves net cash by −£17,530, the pension contribution by +£36,000, and the effective rate by −18.5%. The shift in effective rate is large enough that the binding tax constraint has changed — probably crossing a band boundary. The optimiser shifts £26,460 of the extraction out of the dividend slice, and £36,000 into pension contributions.

Questions this scenario raises

Why does the page link to specific other professions?

The five linked pages at the bottom are computed by a similarity metric over (profession, income, structure, age band) — the closest five neighbours in that space, not the same five pages every row links to. The aim is a genuine cross-link graph rather than a star pattern that search engines correctly read as a pSEO signal.

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.

Why does the optimiser want such a large pension contribution?

Because employer pension contributions dodge three taxes simultaneously: corporation tax (deductible), employer NI (none), and personal income tax / NI / dividend tax (none until drawdown). For this row the optimiser allocates £36,000 to pension — the largest tax shelter available to a director.

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.

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.

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.