How the sums are done
Rates for 2026/27. Checked against gov.uk on 7 November 2026.
One engine, rates as data
Every calculator calls the same TypeScript functions. Rates and thresholds live in one data file per tax year, so an April update is a one-file change and every page moves at once. Each figure below links to the gov.uk page it was taken from.
Rates in use
| Figure | 2026/27 | Source |
|---|---|---|
| Personal allowance | £12,570 | gov.uk |
| Allowance tapers from | £100,000 | gov.uk |
| Income tax band 1 (£0 to £37,700 taxable) | 20% | gov.uk |
| Income tax band 2 (£37,700 to £125,140 taxable) | 40% | gov.uk |
| Income tax band 3 (over £125,140 taxable) | 45% | gov.uk |
| Dividend allowance | £500 | gov.uk |
| Dividend rates (basic, higher, additional) | 10.75%, 35.75%, 39.35% | gov.uk |
| Employee NI: £12,570 to £50,270, then above | 8%, 2% | gov.uk |
| Employer NI above £5,000 | 15% | gov.uk |
| Class 4 NI: £12,570 to £50,270, then above | 6%, 2% | gov.uk |
| Corporation tax small profits rate (to £50,000) | 19% | gov.uk |
| Corporation tax main rate (from £250,000) | 25% | gov.uk |
| Marginal relief fraction | 3/200 | gov.uk |
| VAT standard rate; registration threshold | 20%; £90,000 | gov.uk |
Employment Allowance (£10,500) and the marginal relief fraction (3/200) are not printed on the linked pages; the engine does not use the Employment Allowance, and the fraction comes from HMRC marginal relief guidance. Student loan thresholds are from a gov.uk page that does not name the tax year. Mileage is 55p for the first 10,000 miles from 6 April 2026 (announced 21 May 2026); the over-10,000 rate is reported to rise to 35p from April 2027 (not yet in the rate file). s455 is 35.75% for loans made on or after 6 April 2026; the plain-English gov.uk directors-loans page still shows 33.75%.
Formulas
Income tax on salary
Taxable income is salary less the personal allowance. The allowance falls by £1 for every £2 of income over £100,000, reaching zero at £125,140. Taxable income is then charged through the bands in order. Scottish bands are not modelled.
National Insurance
Employee NI uses annual thresholds, as HMRC does for directors. Employer NI is charged on salary above the secondary threshold; the Employment Allowance is not applied because a sole director company does not qualify.
Dividends
Dividends sit on top of other income. Any personal allowance left after salary shelters dividends first. The dividend allowance is taxed at 0% but uses band space. The rest is charged at the dividend rate of whichever band it lands in.
Corporation tax
Profit up to the lower limit is taxed at the small profits rate, and profit at or above the upper limit at the main rate. In between, tax is the main rate less marginal relief of 3/200 of the gap between the upper limit and profit. The engine assumes a 12-month period and no associated companies.
Limited company take-home
Revenue is day rate times days. Profit is revenue less salary, employer NI, expenses and employer pension. Corporation tax comes off; everything left is paid as dividends. Take-home is salary plus dividends less income tax, employee NI and dividend tax. VAT is treated as neutral.
Umbrella take-home
The umbrella margin comes off the assignment income. Employer NI and the 0.5% apprenticeship levy are then solved out of what remains, so that gross pay plus both employer costs equals the amount after margin. Income tax and employee NI are charged on gross pay. Holiday pay is assumed rolled up and pension opted out.
Day rate and salary conversions
Break-even figures are found by searching for the day rate, or the salary, at which the two take-home models produce the same number, to the penny.
Rounding
Each tax, relief and NI figure is rounded to the penny when it is computed, which matches payslips and HMRC calculations closely but can differ by a penny from a single unrounded sum.
Testing
Every engine function has test cases worked by hand from the thresholds above, including the boundaries at £5,000, £12,570, £50,270, £100,000 and £125,140. The tests run before every deployment. No chartered accountant or tax adviser has reviewed the figures yet. That is planned, and I will note it here when it happens.
Not covered yet
- Scottish income tax bands.
- Student loan repayments.
- Pension tax relief on personal contributions.
- Other income alongside the contract.
- Associated companies and short accounting periods.