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.
Source: HMRC Corporation Tax rates. Supports corporation tax in the limited company comparison. Source checked on .
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.
What this calculation assumes
Calculators model a full tax or contract year in one step. Money is carried at full precision through the calculation and rounded once for display, to the penny for exact amounts and to the nearest pound where a figure is labelled an estimate.
- Pay-period rounding in real payroll can make the yearly total differ by a small amount
- Monthly figures are an annual result divided by twelve, not a payroll month
- A part-year start or leaver date is not modelled unless the page offers it
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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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Sources and method
- HMRC Corporation Tax rates (HM Revenue & Customs). Supports: Corporation tax in the limited company comparison. United Kingdom, Financial year 2026. Source checked on .
- HMRC tax on dividends (HM Revenue & Customs). Supports: Dividend tax in the limited company comparison. United Kingdom, 2026/27 tax year. Source checked on .
- HMRC Income Tax rates and allowances (HM Revenue & Customs). Supports: Income tax in both the umbrella and limited company routes. England and Wales, 2026/27 tax year. Source checked on .
- HMRC National Insurance rates and categories (HM Revenue & Customs). Supports: National Insurance in both routes. United Kingdom, 2026/27 tax year. Source checked on .
Method: Annual estimates and rounding.
Spotted a figure that looks wrong? Report a correction and we will check it against the source above.
Further reading
Background references used while writing this page. The sources behind the calculated figures are listed above.
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.