Software contractor on £180,000

Personal Ltd Co. Outside IR35. Age 52. 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

£76,282

Pension

£60,000

Effective rate

24.3%

Marginal rate

33.8%

Worked example: Software contractor, 52, £180,000 of company profit

Picture a software contractor aged 52 for the 2026/27 tax year, operating through a personal Ltd Co outside IR35, with £180,000 of profit before director pay. The optimisation goal for this profile is maximum net wealth (treating £1 of pension as £1 of cash today).

Running the engine for this exact profile:

Optimum salary: £12,570
Optimum dividend: £81,876
Optimum pension contribution: £60,000
Net cash to the director: £76,282
Net wealth (cash + pension): £136,282
Total tax + NI through the chain: £43,718 (24.3% effective on gross profit)
Money left on the table by the £12,570-salary rule of thumb: £34,049

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	£81,876
Optimum pension	£60,000
Net cash (optimum)	£76,282
Net wealth (cash + pension)	£136,282
Rule-of-thumb net cash	£102,233
Rule-of-thumb net wealth	£102,233
Saving vs rule of thumb	£34,049
Effective rate on profit	24.3%
Marginal rate (next £1 dividend)	33.8%
Years to age-57 pension access	5
Annual pension contribution (this row)	£60,000
Projected pot at 57 (5% real, single-path)	£331,538
Sustainable income @ 4% SWR	£13,262/yr

Why this scenario is different

Compared to the closest peer profile — Software contractor at £180,000 — 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 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.

Are the numbers on this page computed live or pre-rendered?

They are pre-rendered at build time by running the BracketMath engine code against the inputs for this specific row. That means: zero JavaScript on the page for the calculation itself, the figures cannot drift if the engine is changed, and you can verify them by running the corresponding calculator with the same inputs.

Is the Employment Allowance available for a single-director company?

No. A company with only one director who is also the sole paid employee cannot claim the £10,500 Employment Allowance (HMRC manual ESM4017). For genuine multi-employee setups it is claimable and the optimiser can model it via the `claimEmploymentAllowance` flag.

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.

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.