If IR35 applies to your contract income then the majority of the company’s income will be paid to you by salary.

If IR35 does not apply to your contract income then the salary level you wish to choose will have a significant effect on your overall tax and national insurance bill and therefore your net take home pay.

To illustrate this – if you decide to take an annual salary of £20,000 as opposed to £6,035 you would have an overall additional tax burden of over £4,500.

Before deciding on the level of salary to draw we would recommend you refer to Factors to be considered in setting salary levels.

For the purposes of this calculation unless you input a salary of your own choice we will assume you will draw a minimal salary of £6,035 per annum. This level of salary will maintain your national insurance contributions for benefits purposes and also ensure you utilise your annual personal tax allowance.

If after reviewing the factors to be considered in setting salary levels you wish to use a different salary figure then please input your required annual gross salary where indicated.

Please note that if you intend to contribute more than £300 per month to a pension then for the purposes of this calculation we would recommend that you input an annual salary of three times the annual pension contributions you wish to make.

It has been assumed that the remaining company profit, after deducting salary and expenses, will be drawn to you by way of dividend.

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