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.
Above £125k you're in additional rate (45%) — pension is even more valuable
At 45% IT and 39.35% dividend additional-rate tax, every £1 you keep out of personal income via pension contributions saves materially more than at lower bands. Annual allowance tapers for very high earners (above £260k) but most people don't hit that.
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.