Contractor Salary & Dividends Calculator 2026/27
Find the optimal salary/dividend split for your Limited Company. Compare Inside vs Outside IR35, see Corporation Tax on your profits, and calculate your real take-home for 2026/27.
Your Ltd Company
Paid directly from the Ltd Co into your pension (saves Corp Tax).
Total Personal Take-Home Pay
£56,383
💡 Why £12,570 salary?
We've automatically set your salary to £12,570. This perfectly uses up your tax-free Personal Allowance and qualifies you for State Pension credits, without triggering any Income Tax or Employee National Insurance.
Optimal salary/dividend split 2026/27
The standard accountant recommendation for a solo Ltd company director outside IR35 is a £12,570 salary + dividends strategy:
- Salary: £12,570/year — uses your Personal Allowance fully. Zero Income Tax, zero Employee NI. Qualifies as a State Pension year. Deductible from company profits (saves Corp Tax).
- Dividends: remaining profit after Corp Tax — first £500 is tax-free (Dividend Allowance). Basic rate dividends taxed at just 8.75% vs 20% income tax.
- Employer pension: Direct employer contributions to your SIPP bypass Corp Tax, Income Tax, and dividend tax entirely — the most efficient withdrawal method.
| Annual revenue | Corp Tax (19%) | After Corp Tax | Salary taken | Dividends taxable | Approx total tax | Effective rate |
|---|---|---|---|---|---|---|
| £60,000 | ~£8,930 | ~£51,070 | £12,570 | £38,000 | ~£11,650 | ~19% |
| £100,000 | ~£16,530 | ~£83,470 | £12,570 | £70,400 | ~£26,750 | ~27% |
| £150,000 | ~£28,030 | ~£121,970 | £12,570 | £109,000 | ~£55,000 | ~37% |
Estimates. Assumes no personal expenses, no pension contributions, standard 1257L tax code. Revenue = billable fee income.
Corporation Tax on limited company profits 2026/27
Corporation Tax is paid by your Limited Company on profits before you take dividends. The rate depends on profit level:
| Company profit | Rate | Notes |
|---|---|---|
| Up to £50,000 | 19% (Small Profits Rate) | Most solo contractors fall here |
| £50,001 – £249,999 | Marginal Relief (19–25%) | Effective marginal rate 26.5% in this band |
| £250,000+ | 25% (Main Rate) | Flat rate — no marginal relief |
Employer pension contributions reduce company profit before Corporation Tax is calculated. A £10,000 employer pension contribution saves £1,900 in Corp Tax (at 19%) in addition to saving all personal income/dividend tax on that amount.
Dividend tax rates 2026/27
Dividends are paid from after-Corporation Tax profits. They do not attract National Insurance. Tax rates on dividends:
| Band | Total income threshold | Dividend tax rate |
|---|---|---|
| Dividend Allowance | First £500 of dividends | 0% |
| Basic Rate | Total income up to £50,270 | 8.75% |
| Higher Rate | Total income £50,271 – £125,140 | 33.75% |
| Additional Rate | Total income above £125,140 | 39.35% |
How inside vs outside IR35 changes the calculation
Inside IR35 fundamentally breaks the Ltd company model. Here is the comparison at £400/day (220 days):
- Revenue paid gross into Ltd
- Corp Tax ~19% on profits
- Salary + dividends
- Take-home: ~£60,000–£65,000
- Effective rate: ~25–30%
- Employer NI 15% deducted first
- Apprenticeship Levy 0.5%
- Full PAYE on gross pay
- Take-home: ~£49,000–£52,000
- Effective rate: ~42–44%
Compare your IR35 options
See your exact retention rate inside vs outside IR35 with your day rate, or understand how your umbrella company deductions work.