Optimisation moves available at this income level
Make full use of the £500 dividend allowance (Ltd) or £1,000 trading allowance (sole)
Even a single £500 dividend payment (or £1,000 of self-employed income if you're not yet trading) sits tax-free. Pension contributions and ISA usage are the cheaper allowances most people miss.
Maximise company pension contributions (Ltd)
Company-paid pension contributions are fully deductible against corporation tax AND don't count toward your personal income for PA tapering purposes. Up to £60,000/year (or £80,000 with carry-forward) can be paid in. For higher-rate earners this is the single biggest tax-efficient extraction route — saves both corporation tax AND avoids dividend tax.
Retain profit in the company rather than extracting all
Dividends taxed at higher rate cost 33.75%. Retained profit in the Ltd company stays at 19-25% corporation tax. If you don't need all the cash personally, keep it in the company to fund future investment, deposits, or future tax years where you might be in a lower personal band.
Stay below £100k personal income to keep the personal allowance
Between £100k and £125,140 of personal income, you lose £1 of PA for every £2 of income. The effective marginal tax rate is 60% (40% IT + losing £0.50 of tax-free allowance per £1). Pension contributions and salary sacrifice are the standard moves to bring adjusted net income below £100k. Take Home models exactly how much pension you'd need to clear the cliff.
Connect Take Home for your personalised optimal mix
Take Home connects to FreeAgent, Xero or QuickBooks and runs your real numbers — including other income, pension contributions, investment income and family situation — to model the optimal salary/dividend/pension split for your specific case. The numbers on this page are the headline; Take Home gives you your actual personal optimum.