Software contractor on £90,000

Personal Ltd Co. Outside IR35. Age 36. 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

£26,000

Effective rate

16.7%

Marginal rate

33.8%

Software contractor vs sole trader at £90,000 — what changes

The decision a software contractor faces at £90,000 of income for 2026/27 is rarely "which calculator do I use" — it is "which legal structure leaves the most money in my pocket after tax." This page resolves the question for one specific scenario by running the relevant engines side-by-side at build time, so every number that follows is reproducible from a single CSV row and the BracketMath source code.

On the Ltd Co route, the joint optimiser places £12,570 as salary, £40,716 as dividend, £26,000 as an employer pension contribution. Net cash to the director: £49,013. Pension contribution: £26,000.

On a sole-trader route at the same gross profit, the figures shift materially. Income tax + Class 4 NI take a bigger combined bite (no dividend-tax band, no corporation-tax shelter, no employer pension dodge) and the trader's pension contributions are personal — not deductible from the gross. For comparison numbers across all common profit levels, see the contractor tax guide.

For a complete walk-through of the optimisation for this specific scenario, see the comparison table further down this page.

The numbers, line by line

Optimum salary	£12,570
Optimum dividend	£40,716
Optimum pension	£26,000
Net cash (optimum)	£49,013
Net wealth (cash + pension)	£75,013
Rule-of-thumb net cash	£61,674
Rule-of-thumb net wealth	£61,674
Saving vs rule of thumb	£340
Effective rate on profit	16.7%
Marginal rate (next £1 dividend)	33.8%

Why this scenario is different

Compared to the closest peer profile — DevOps contractor at £90,000 — 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

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).

What is the £500 Dividend Allowance and how is it used?

The first £500 of dividends in 2026/27 is taxed at 0%. It does not reduce taxable income — it sits as a 0% slice within the band schedule. So a basic-rate dividend recipient with £500 of dividends pays £0; with £600 of dividends pays 8.75% × £100 = £8.75. The £500 is consumed in band order (cheapest band first).

Is this calculation valid for the 2027/28 tax year?

Only partially. Thresholds (PA, basic-rate, higher-rate, NI thresholds) are frozen through April 2028 per the Autumn Budget 2024. Some rates may change at the Spring 2027 Budget. The figures here are accurate for 2026/27 and will be re-run after any future Finance Act changes — check the published-date footer of this page.

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 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.

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.