United Kingdom · Updated for 2026/27
Contractor calculator 2026/27
At £500 a day for 220 days (£110,000), your company pays £21,768 Corporation Tax. Take a £12,570 salary and the rest as dividends, and you keep £69,932 a year after tax: £5,828 a month.
Type your day rate, your days and your costs. Choose how much to take out as dividends.
Limited company · England, Wales or Northern Ireland · no student loan
£69,932.00 a year in your pocket
£5,827.67 a month · £0.00 left in the company · all taxes £40,068.00
| Year | |
|---|---|
| Paid to your company | £110,000.00 |
| Your salary | −£12,570.00 |
| Employer National Insurance | −£1,135.50 |
| Corporation Tax (with marginal relief) | −£21,768.04 |
| Profit after tax | £74,526.46 |
| Salary plus dividends | £87,096.46 |
| Income tax on salary | £0.00 |
| Dividend tax | −£17,164.46 |
| Take-home pay | £69,932.00 |
Corporation Tax
Profit £96,294.50: the main rate less marginal relief of £2,305.58, 22.61% in all = £21,768.04.
Dividend tax
| Dividends | Tax | |
|---|---|---|
| Dividend allowance (0%) | £500.00 | £0.00 |
| Basic rate, 10.75% | £37,200.00 | £3,999.00 |
| Higher rate, 35.75% | £36,826.46 | £13,165.46 |
How does a limited company pay a contractor?
The client pays your company. Your company pays you a small salary, which costs it employer National Insurance (15% above £5,000 a year), then pays Corporation Tax on the profit that is left. What remains after tax can be paid to you as dividends. Dividends are taxed at lower rates than salary and carry no National Insurance, which is why most contractors take a small salary and the rest as dividends.
You don’t have to take it all. Take only £37,700 of dividends, the most that stays in the basic-rate band on top of a £12,570 salary, and you pay £3,999 of dividend tax and keep £46,271; the other £36,826 stays in the company, to be taxed as dividends when you take it out later.
Why does the calculator start with a £12,570 salary?
It is the Personal Allowance, so there is no income tax on it, and it is under the point where employee National Insurance starts. It still counts towards your State Pension. The company pays employer National Insurance on the part above £5,000, but the salary and that NI both come off its profit, and the Corporation Tax saved is more than the NI paid. The Employment Allowance, which would cover the NI, cannot be claimed when the director is the only employee: GOV.UK explains the rule for single-director companies.
What are the Corporation Tax rates for 2026/27?
- 19% on profits up to £50,000 (the small profits rate).
- 25% on profits of £250,000 or more (the main rate).
- In between, the main rate less marginal relief of 3/200 of the gap between the profit and £250,000, so the rate climbs smoothly from 19% to 25%.
Dividends then pay 10.75% in the basic-rate band, 35.75% in the higher-rate band and 39.35% above that, after a £500 dividend allowance. The dividend tax calculator shows the bands in detail.
What does the calculator leave out?
Pension payments from the company, VAT, other income, and a company that shares its limits with associated companies or has an accounting year that is not 12 months long. Your accountant, insurance and other running costs can go in the expenses box. It assumes every contract is outside IR35.
What else can I work out?
- IR35 calculator Inside an umbrella or outside through your own company: your take-home on the same day rate.
- Dividend tax calculator Tax on dividends band by band, after the dividend allowance, with your salary.
- Day rate calculator The day rate that matches a salary, inside and outside IR35, and the salary a day rate is worth.
- Salary calculator Take-home pay on any salary, with tax codes, Scotland, pensions and student loans.
Every UK tool on one page: salary and tax tools. How the rules work: UK pay and tax guides.
Questions about contracting through a company
What is the best salary for a company director?
For most contractors with one company, a salary of £12,570 (the Personal Allowance). It pays no income tax or employee NI, it counts for your State Pension, and the Corporation Tax it saves is more than the employer NI it costs. Above about £100,000 of income the choice makes little difference.
Can my limited company claim the Employment Allowance?
No, not if you are the only director and nobody else is paid above the secondary threshold. That is why the calculator charges employer National Insurance on your salary in full.
Do I pay National Insurance on dividends?
No. Dividends carry income tax at the dividend rates, but no National Insurance, for you or for the company. That is the main reason contractors take most of their pay as dividends.
When do I pay the dividend tax?
Through Self Assessment: the tax for 2026/27 is due by 31 January 2028. A large bill can also bring payments on account for the next year. The self employed tax calculator explains how those work.
Is this calculator for contracts outside IR35 only?
Yes. It assumes your company keeps the money and pays you. If a contract is inside IR35, use the IR35 calculator to compare the two.