Methodology

Income Tax (England, Wales, Northern Ireland)

The four-band system, applied to taxable income:

• Personal allowance — £12,570 (2024-25 and 2025-26). Tax-free.
• Basic rate — 20% on income from £12,571 to £50,270.
• Higher rate — 40% on income from £50,271 to £125,140.
• Additional rate — 45% on income above £125,140.

For income above £100,000, the personal allowance reduces by £1 for every £2 of income — fully eroded at £125,140. We apply this taper automatically.

Income Tax (Scotland)

Scotland has six bands for 2025-26 — Starter (19%), Basic (20%), Intermediate (21%), Higher (42%), Advanced (45%), Top (48%). Toggle Scotland on any calculator to use them. National Insurance and Corporation Tax are reserved matters and use UK-wide rates.

National Insurance

• Class 1 (employees, Ltd directors) — 8% main rate between £12,570 and £50,270, 2% above. The main rate was cut from 10% to 8% in April 2024.
• Class 4 (sole traders) — 6% main rate between £12,570 and £50,270, 2% above. Cut from 9% to 6% in April 2024.
• Class 2 (sole traders) — Mandatory Class 2 was abolished in April 2024 for anyone with profits ≥ the small profits threshold (£6,725 in 2024-25, £6,845 in 2025-26). Below that, you can pay voluntarily for state pension credits.
• Employer NI — 15% above the £5,000 secondary threshold (2025-26). Was 13.8% above £9,100 in 2024-25.
• Employment Allowance — £10,500/year (2025-26) reduces an eligible employer's NI bill. Single-director PSCs cannot claim under the sole-director rule (since 2016).

Corporation Tax

• Small profits rate — 19% on profits up to £50,000.
• Main rate — 25% on profits above £250,000.
• Marginal relief between £50k and £250k: tax = profit × 25% − (£250,000 − profit) × 3/200.

Dividend Tax

Dividends sit on top of other income in the band stack. The £500 dividend allowance is tax-free but consumes bandwidth — so the next pound of dividend after the allowance is already at the band rate where the allowance fell.

• Basic rate — 8.75%
• Higher rate — 33.75%
• Additional rate — 39.35%

Optimal salary/dividend split (Ltd Director)

The optimiser tests three boundary candidates: £0, the employer NI secondary threshold (£5,000), and the personal allowance (£12,570). For single-director PSCs the optimum is almost always salary at the personal allowance — fully corporation-tax-deductible, no employee NI, no income tax, only a small employer NI bill.

Incremental tax for mixed income

When you enter "other income" alongside SE profit or director salary, we calculate the incremental income tax caused by the SE/director portion: tax(combined) − tax(otherIncome). This avoids double-counting tax that PAYE has already collected on your other income, so "take-home from self-employment" is honest.

IR35 Checker scoring

Each of nine factors contributes points to a starting score of 50:

• High weight (±20) — substitution, control, mutuality of obligation.
• Medium weight (±10) — substitute approval, equipment, financial risk.
• Low weight (±5) — multiple clients, exclusivity, "part and parcel".

Final score is clamped to [0, 100]. Risk levels: 0–30 high (likely inside), 31–65 medium, 66–100 low (likely outside). This is a guide based on standard IR35 case law, not a Status Determination Statement.

What's not modelled

• High Income Child Benefit Charge (HICBC)
• Marriage Allowance transfer
• Blind Person's Allowance
• Savings interest and savings allowance interaction with bands
• Capital Gains Tax
• VAT
• Salary sacrifice schemes (pension is treated as a simple deduction)
• Off-payroll working Chapter 10 deemed-employer NI on contractor's PSC

For these and other complex cases, talk to an accountant.

Sources

All rates verified against:

• HMRC: Income Tax, Corporation Tax, National Insurance, Employment Allowance, Dividend Tax.
• Revenue Scotland for Scottish bands.