Limited Company Tax Calculator 2026/27
From fee income to your pocket. Work out your company's taxable profit, corporation tax with marginal relief, employer and employee NIC, dividend tax at the new 2026/27 rates, and the effective rate you really pay.
Company profit and take-home
What the company invoices clients or agencies in a year, before VAT and before any costs.
£12,570 matches the personal allowance and the NIC primary threshold.
Paid by the company. Deductible for corporation tax and free of NIC.
Travel, subsistence, equipment, software, training, mileage at 55p a mile.
Accountancy, professional indemnity and other insurance, bank charges, use of home.
Each one divides the £50,000 and £250,000 marginal relief limits.
A pension, rent, a second job. It fills the lower tax bands first, so company income stacks on top.
A single-director company with no other employee above the secondary threshold cannot claim it.
Company stage
Personal stage
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Where every pound of fee income goes
A £12,570 salary, £4,000 of expenses, £2,000 of other costs, no pension, no associated companies and all post-tax profit drawn as dividends. Click any row to load it into the calculator.
| Fee income | Taxable profit | Corporation tax | Total tax & NI | In your pocket | Effective rate |
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In two stages. The company deducts allowable expenses, your salary, the employer's National Insurance on that salary and any company pension contribution from its fee income, then pays corporation tax on what is left. You then pay income tax and employee National Insurance on the salary through PAYE, and dividend tax on whatever the company distributes out of its post-tax profit. Salary, employer NIC and pension contributions are company deductions; dividends are not — they are paid out of profit that has already borne corporation tax.
19% if taxable profits are £50,000 or less, 25% if they are over £250,000, and 25% less marginal relief in between — which works out at an effective 26.5% on the slice between the two limits. Both limits are divided by one plus the number of associated companies, so a second company you control halves them to £25,000 and £125,000.
£12,570 is the personal allowance and also the primary threshold for employee National Insurance, so the salary carries no income tax and no employee NIC. It still costs the company 15% employer NIC on the £7,570 above the £5,000 secondary threshold — £1,135.50 — but the salary and that employer NIC are both deductible for corporation tax. The National Minimum Wage does not apply to a sole director with no employment contract, which is why such a low salary is lawful.
No. Under Companies Act 2006 s.830 a dividend can only be paid out of accumulated realised profits. If the year is a loss and there are no retained reserves from earlier years, there is nothing to distribute. A dividend voted anyway is unlawful and is typically recharacterised as salary or as a director's loan — and an outstanding loan to a participator attracts the s.455 charge at 35.75% for loans made on or after 6 April 2026.
Usually not. A company whose only employee paid above the secondary threshold is a single director is excluded from the Employment Allowance, which is the normal position for a one-person contractor company. If a second employee — often a spouse doing real work — is paid above the £5,000 secondary threshold, the company can claim up to £10,500 against its employer NIC bill. This calculator assumes no claim unless you switch it on.
The dividend ordinary rate rose from 8.75% to 10.75% and the upper rate from 33.75% to 35.75% for 2026/27. The additional rate did not move — it is still 39.35% — and the £500 dividend allowance is unchanged. For a contractor drawing roughly £63,000 of dividends on a £12,570 salary, the two percentage points cost about £1,250 a year.
How this calculator works
A contractor limited company is taxed twice over: once as a company, once as you. The calculator runs both stages in order, because the second depends on the first.
Stage one — the company
- Employer's NIC = 15% × (salary − £5,000). Nothing is due on the first £5,000 of salary, the secondary threshold. If the Employment Allowance is claimed, up to £10,500 comes off the bill.
- Taxable profit = fee income − expenses − other costs − salary − employer's NIC − employer pension contribution.
- Marginal relief limits: lower limit L = £50,000 ÷ (1 + associated companies); upper limit U = £250,000 ÷ (1 + associated companies).
- Corporation tax: if profit ≤ L, tax = profit × 19%. If profit > U, tax = profit × 25%. In between, tax = (profit × 25%) − marginal relief, where marginal relief = 3/200 × (U − profit). That is a flat 26.5% on every pound between L and U.
- Available to distribute = taxable profit − corporation tax.
Stage two — you
- Personal allowance = £12,570, reduced by £1 for every £2 of total income over £100,000, so nil at £125,140. Salary, dividends and other income all count towards that £100,000.
- Income tax on the salary: 20% on taxable income up to £37,700, 40% from £37,701 to £125,140, 45% above. Your other personal income fills the lower bands first, so the company salary is charged on top of it.
- Employee's NIC = 8% × (min(salary, £50,270) − £12,570) + 2% × (salary − £50,270). A director has an annual earnings period, so the annual thresholds apply however the salary is paid through the year.
- Dividend tax: dividends are the top slice of your income. The first £500 is charged at the dividend nil rate, then 10.75% inside the basic-rate band, 35.75% inside the higher-rate band and 39.35% above £125,140 of taxable income.
- Effective rate = (corporation tax + employer's NIC + income tax + employee's NIC + dividend tax) ÷ fee income.
Five traps worth knowing
1. Employer's NIC is deductible — so it costs less than it looks
The 15% employer's NIC on a £12,570 salary is £1,135.50, but it reduces taxable profit, so at the 26.5% marginal band the company saves £300.91 of corporation tax on it. The salary itself is deductible too. That is why a salary above the £5,000 secondary threshold is still usually worth paying: the corporation tax relief on salary plus employer NIC beats the 15% cost.
2. A company pension contribution is deductible and carries no NIC at all
An employer contribution to a registered scheme is deducted from profit, attracts no employer NIC and no employee NIC, and is not a benefit in kind. It is the only route that escapes both corporation tax and dividend tax — the annual allowance is £60,000 (employer and personal contributions combined), with up to three years of unused allowance available to carry forward. Note the NIC exemption on salary sacrifice is capped at £2,000 from 6 April 2029; a straightforward employer contribution like this one is not affected.
3. You cannot pay a dividend out of a loss
Dividends come only from accumulated realised profits (Companies Act 2006 s.830). If the calculator shows a loss, it pays no dividend — deliberately. Drawing money anyway creates a director's loan, and a loan still outstanding nine months and a day after the year end triggers the s.455 charge at 35.75% for loans made on or after 6 April 2026 (older loans keep 33.75% — the rate follows the date of the loan, not the accounting period).
4. A single-director company cannot claim the Employment Allowance
The £10,500 Employment Allowance is not available where the only person paid above the secondary threshold is a sole director. That is the standard one-person contractor company, so the calculator assumes no claim. Switch it on only if a second employee is genuinely paid above £5,000.
5. The dividend allowance uses up band — it is not a deduction
The £500 is a nil-rate band that sits inside your tax bands, not an amount you subtract from income. It therefore occupies £500 of whichever band your dividends land in, and it does not extend the basic-rate band or move the £100,000 and £125,140 thresholds. On a £49,970 salary with £1,000 of dividends the £500 eats the last £300 of basic-rate band and £200 of higher-rate band, leaving the other £500 of dividends taxed at 35.75% — £178.75, not the £103.75 you would get by treating the allowance as a deduction.
What the calculator does not model
VAT (use the VAT calculator or the Flat Rate Scheme calculator), IR35 — it assumes the engagement is genuinely outside the off-payroll rules, so use the IR35 calculator if a deemed payment applies — student loan deductions, Scottish income tax bands on the salary, capital allowances, losses carried in or back, a short or long accounting period, dividend waivers, a spouse as a second shareholder, or benefits in kind. It also assumes the company year lines up with the tax year; corporation tax rates are unchanged for FY2027, so a straddling year makes no difference to the arithmetic.
This calculator provides arithmetic calculations only and is not tax advice. Figures assume an rUK taxpayer, a 12-month accounting period and an engagement outside IR35. Verify with GOV.UK corporation tax rates and marginal relief or a qualified accountant.