Quick answer
Work backwards from the take-home pay you want in 2026/27 to the day rate or gross contract income needed after tax, NI and company costs. It uses the rates and thresholds HMRC has published for 2026/27 (Works backwards using 2026/27 income tax, dividend tax, corporation tax and employer NI rates, iterating to find the gross figures that net down to your target). Worked example: with target annual take-home pay £60,000, limited company salary drawn £12,570, annual company running costs £2,000, the result is day rate required £413.49 and gross contract income required £90,968. Free to use, no sign-up, from LimitedCompany.Accountants (ICAEW-regulated ACCOTAX).
Rather than guessing at a day rate, tell this calculator the take-home pay you want each year and it works backwards through corporation tax, dividend tax and running costs to show the gross contract income and day rate you need in 2026/27.
The target income calculator runs on the rates and thresholds HMRC has published for the 2026/27 tax year, so the figures you see reflect the position your company is actually filing on rather than a historic set of bands. Change any input and the result recalculates immediately, with no sign-up and nothing sent anywhere.
If you are a director of a UK limited company, use it as a first look before a decision rather than as the decision itself. Works backwards using 2026/27 income tax, dividend tax, corporation tax and employer NI rates, iterating to find the gross figures that net down to your target. Real company positions bring in other income, reliefs, group structures and prior year adjustments that a single page of inputs cannot see, which is why the workings are written out below under contractor, ir35 & umbrella. Read those, then check the numbers against your own accounts, and speak to us if anything looks materially different from what you expected.
Last checked against HMRC rates: 12 September 2026 (2026/27 tax year). Reviewed by Waqas Sagar, Member of ICAEW, Fellow of ACCA, Fellow of AAT.
Result, 2026/27
Day rate required
Gross contract income required
Dividends required (before tax)
Corporation tax on profit
Illustration only, figures are based on the rates you have selected and the information entered. Please check your own position with us before acting.
Estimates for the 2026/27 tax year using published GOV.UK rates. Switch between 2026/27 and 2025/26 above.
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A general first call about our services is free. Technical tax advice is a paid consultation.
Book a free general call WhatsApp usBook technical advice (paid)The calculator first works out how much of your target take-home pay is covered by your chosen salary, after income tax and employee National Insurance, using the personal allowance and standard bands for the year. Any shortfall must come from dividends.
Because dividend tax depends on the dividend allowance and the rate that applies once your salary and other dividends use up lower bands, the calculator iterates: it estimates a gross dividend figure, works out the tax, checks whether the net amount matches what you need, and adjusts until it converges.
The same iterative approach is applied to corporation tax, since the small profits rate, marginal relief and main rate mean the relationship between profit and dividends available is not a simple percentage. The gross contract income needed is then the sum of profit, salary, employer's National Insurance and running costs.
For a moderate target income, roughly 25 to 40% of gross contract income typically disappears in employer's National Insurance, corporation tax and personal tax by the time it reaches your take-home pay, and the proportion rises as income increases due to higher marginal tax rates.
This is why contractors often underestimate the day rate needed to hit a target lifestyle income, particularly once accountancy fees, pension contributions and unpaid time between contracts are added on top.
If a client's budget will not stretch to the day rate this calculator shows, you have three levers: reduce your target take-home pay, increase billable days, or accept a lower net income for this particular contract.
Compare the result with the salary vs contracting calculator to see how the same target compares with an equivalent permanent salary.
Treat the result as a planning figure for the 2026/27 tax year. If it changes what you were about to do, take a director's salary, a dividend, a large asset purchase or a filing decision, check it against your own accounts first. We can review the position with you and confirm the tax treatment before you commit.
Because UK dividend and corporation tax are progressive, with allowances and rate bands, there is no single percentage that converts a take-home target directly into a gross figure. The calculator repeatedly estimates and refines the gross figures until the resulting take-home pay matches your target.
No. VAT, where charged, is collected on top of the day rate and paid to HMRC (less input VAT recovered), so it does not affect your personal take-home pay and is excluded from this calculation.
This calculator assumes a single tax year. Spreading dividends across two tax years can reduce the effective tax rate if it keeps you in a lower band each year, but that requires a year-by-year plan rather than this quick calculator.
This calculator focuses on cash take-home pay. Employer pension contributions from your limited company are a separate, tax-efficient way to build wealth and are not included in the target figure here.
Keep going
Same rates, different question.
Compare net take-home pay from an employed salary against limited company contracting for 2026/27 across tax, National Insurance and corporation tax.
CalculatorCompare take-home pay and benefits value moving from a permanent salary to limited company contracting for 2026/27, factoring in tax, NI and lost employment benefits.
CalculatorCompare limited company and umbrella take-home pay for 2026/27 using current dividend, NI and employer NI rates to see which route suits your contract.
CalculatorCalculate the personal tax on dividends from your limited company for 2026/27, using the £500 dividend allowance and the 10.75%, 35.75% and 39.35% rates.
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