Contractor Take-Home Calculator 2026/27
A limited company contractor on £500 per day over 220 days (£110,000) typically keeps £70,000 to £80,000 after tax via a £5,000 salary, corporation tax and 10.75 to 35.75% dividend tax. For 2026/27, higher dividend rates slightly narrow the outside-IR35 advantage. Enter your day rate below.
Figures verified against HMRC Corporation Tax rates on .
Written by James HartleyCIMA
Calculator
Your contracted daily rate before any deductions.
Typical limited company contractors bill 220 to 240 days per year.
£5,000 is optimal - below employer NI threshold, maintains State Pension record.
Legitimate business expenses: home office, equipment, professional subscriptions, travel, etc.
Company pension contributions reduce corporation tax liability and are not subject to any personal tax.
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How Contractor Take-Home Calculator 2026/27 Works
We model the full limited company flow: gross revenue → deduct salary, employer NI, expenses and pension → apply corporation tax → distribute remaining profit as dividends → apply personal dividend tax on top of salary.
Optimal salary choice
We default to £5,000 (Secondary NI Threshold). No NI for either party, qualifies for State Pension, well within your personal allowance. Some directors with Employment Allowance set salary at £12,570.
Corporation tax
Profits under £50,000 pay 19%, £50k to £250k use marginal relief (effective rate 19 to 25%), above £250k pays 25% flat. Our calculator applies the exact formula including marginal relief.
Frequently Asked Questions
The optimal salary for a sole director with no Employment Allowance is £5,000 (the Secondary NI Threshold). This means no employer or employee NI, no income tax (within personal allowance), and qualifies for State Pension entitlement. Directors with employees who claim Employment Allowance can increase to £12,570 tax-free.
You can only pay dividends from retained profit after corporation tax. The calculation is: Revenue − Salary − Employer NI − Expenses − Pension = Taxable Profit → apply corporation tax → remaining profit can be taken as dividends. Dividends are taxed at 10.75% (basic rate), 35.75% (higher rate) or 39.35% (additional rate) after the £500 allowance.
Company pension contributions are highly tax-efficient for limited company contractors: the contribution reduces corporation tax, avoids personal income tax, and avoids both employee and employer NI. Effectively, pension contributions of £1,000 may only cost the company £750 to £810 depending on your corporation tax rate.
This calculator models an outside-IR35 limited company contractor. If you're inside IR35, the deemed employment income is taxed as PAYE employment income, removing the ability to take dividends. Use our IR35 calculator to compare the two scenarios directly at your day rate.
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Official Rates Used
This calculator uses official HMRC rates for 2026/27. View the current rates at GOV.UK:
Rates last verified:
Disclaimer: This calculator provides estimates based on standard HMRC rates for 2026/27. Results may vary based on individual circumstances. This is not financial advice. Always consult a qualified accountant or CIMA-qualified financial adviser for personal tax matters.