2026/27 Tax Year

Target income calculator: work backwards from your take-home

Enter the net monthly income you want to hit, pick your structure, and we'll calculate exactly what gross turnover you need for 2026/27. Includes the equivalent day rate at 220 billable days — useful for rate setting as a UK contractor or freelancer.

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Key takeaways

To take home £4,000/month (£48,000/year) as a UK limited company director you need roughly £63,400 of gross turnover, an effective tax rate around 24%.
The same £4,000/month target as a sole trader needs roughly £63,200 of turnover. At this level the two structures land within a few hundred pounds of each other, so the choice turns on liability, expenses and admin rather than on headline tax.
Once your target passes about £6,750/month net your personal income crosses £100,000, the personal allowance taper kicks in and your required gross jumps sharply.
A contractor wanting £6,000/month net (£72,000/year) needs a day rate of around £518 at 220 billable days, useful for rate negotiation.
The solver assumes no expenses, pension contributions or student loan — if those apply to you, your required gross will be lower or higher accordingly.

How it works

Three inputs, one clear answer

Set your target monthly take-home

The net amount you want landing in your account each month after all UK tax.

Pick your business structure

Limited company (salary £12,570 + dividends) or sole trader (income tax + Class 4 NI on profit).

See the required gross

Annual turnover, monthly equivalent, and the day rate at 220 billable days — plus full tax breakdown.

Why reverse-calculate from take-home?

Most people think in terms of net income — what actually lands in their bank account each month. But billing clients, setting day rates and accepting contracts all happen in gross terms. Working backwards from a net target to a gross turnover lets you make rate decisions and revenue plans that actually match your lifestyle goal — especially when UK marginal tax rates stack to 62% in the personal allowance taper band.

How the solver works

The calculator runs a binary search over possible gross turnover values, using the same tax engine as our Take Home Pay Calculator. For each trial value it computes the full tax stack — corporation tax, dividend tax, income tax, NI — and checks whether the resulting net matches your target. It converges on the right answer in under 20 iterations.

The solver is precise to within £50 of your target net. For the limited company path it uses the optimal 2026/27 strategy: £12,570 director salary plus dividends drawing the rest of post-corporation-tax profit. For sole trader it applies income tax and Class 4 NI directly to profit.

A contractor wanting £60,000 net per year (£5,000/month) as a limited company director needs roughly £88,600 of gross turnover. At 220 billable days, that’s a day rate of £403. Push the net target to £6,500/month and required gross rises to about £126,800, or £577/day. Above roughly £6,750/month net your personal income crosses £100,000, the personal allowance starts to taper, and every further pound of take-home costs materially more. The taper band is where rate negotiation gets really important.GoForma technical team, 2026/27 tax year modelling

What the model leaves out

Allowable expenses — business travel, software, training, professional fees. These reduce taxable profit, so your required gross is lower than the calculator shows by roughly the expense amount.
Pension contributions — company-paid employer pension contributions reduce corporation tax. Model these separately if you’re aggressive on retirement saving.
Student loans — sole traders have student loan deducted via Self Assessment at 6% or 9% above the relevant threshold; add this to your effective tax rate.
Scottish residency — Scottish taxpayers have different income tax bands (currently six rates, up to 48%). Our calculator uses England, Wales and NI rates only.
IR35 — the Ltd scenario assumes outside IR35. If your work would be inside IR35, use our Contractor Outside IR35 Calculator instead — the inside-IR35 tax rate is materially higher.

Using this for day-rate setting

The day-rate number the calculator gives you is the minimum viable rate to hit your target take-home — it doesn’t include any cushion for bench time, holidays (beyond the 220-day assumption), illness, new-business downtime or accountancy fees. Most experienced contractors add a 10–15% buffer to the calculated rate when setting their minimum acceptable price.

If you bill by hour, the daily rate ÷ 8 gives a floor hourly rate for a standard working day. Add the buffer before sending it to a client.

Who it's for

Made for UK self-employed workers

Contractors negotiating rates

Working out the minimum day rate needed to hit your take-home goal.

Contractor accountants →

Freelancers planning capacity

Working out how much work you need in a year to hit your lifestyle target.

Freelancer accountants →

Employees considering going freelance

Translating your current PAYE salary into the gross turnover you'd need as a contractor.

Going freelance advice →

Business goal-setters

Setting annual turnover targets from lifestyle and savings goals rather than top-down revenue plans.

Business planning →

Questions answered

Frequently asked questions

How do I calculate what turnover I need for a £5,000 monthly take-home?

As a limited company director in 2026/27 you need gross turnover of roughly £88,600 to take home £5,000 a month (£60,000 a year), an effective rate of about 32.3%. A sole trader needs about £84,000 for the same net, an effective rate of 28.5%. The limited company route costs more at this level because profit is taxed twice, corporation tax first and then dividend tax on what you draw, and the April 2026 dividend increase widened that gap by about £2,300 of turnover. Limited companies still win on liability, on what you can put through the business and on control over when you draw, so treat this as one input to the decision rather than the decision itself.

What day rate do I need for £4,000 monthly take-home?

At 220 billable days per year as an outside-IR35 limited company contractor, you need a day rate of around £288 for £4,000/month net. For £5,000/month net, around £403. For £8,000/month, around £776. This assumes no expenses, pension or student loan — adjust down if you claim expenses or pension, and always add a 10–15% cushion for bench time and holidays.

Is the calculator including corporation tax and dividend tax?

Yes — the limited company scenario runs the full 2026/27 tax stack: £12,570 director salary with £1,135.50 employer NI, corporation tax on remaining profit (19% up to £50k, 26.5% effective in the marginal band, 25% above £250k), and dividend tax on distributions (10.75% / 35.75% / 39.35%). The sole trader scenario applies income tax and Class 4 NI to profit after the personal allowance.

Does this calculator work for Scottish taxpayers?

Not in this version. Scotland uses its own income tax bands (six rates, up to 48%) which the calculator doesn’t model. A Scottish version is planned. The Class 4 NI, dividend tax and corporation tax portions are the same across the UK.

Why do I need so much more gross than net?

UK marginal tax rates stack quickly. At average earnings you typically keep 65–75% of gross; at higher earnings the effective rate climbs into the 35–45% range due to higher-rate income tax, dividend tax and the personal allowance taper. Above £100,000 income, the taper adds an effective 20 percentage points of marginal tax, creating the so-called “62% band”.

Should I include expenses and pension in my target?

Not in this calculator — it solves for net-to-gross assuming no expenses or pension. But you can reduce your required gross by the annual cost of any legitimate allowable expenses (they reduce taxable profit) and by any pension contributions you make (they reduce income tax for sole traders and corporation tax for limited companies). Our Take Home Pay Calculator models expenses and pension explicitly.

What happens at the personal allowance taper?

Above £100,000 of income, the £12,570 personal allowance is withdrawn at £1 for every £2 over £100,000. At £125,140 the PA is completely gone. That creates a marginal effective tax rate of 60% between £100,000 and £125,140 — so hitting a take-home target in that zone needs disproportionately more gross turnover. This calculator handles the taper automatically.

Sources and methodology

Every rate this calculator applies is sourced from HMRC and the UK Government, current for the 2026/27 UK tax year.