Small Business Tax Planner
✓ Verified for 2026/27Business & Director Income
This planner calculates company Corporation Tax on profits (after expenses and director salary), and director-level personal taxes on salary and dividends to find the total tax burden and final take-home pay.
Business Tax & Profit Breakdown
How We Calculated This
- Input variables: Enter the relevant amounts, rates, or percentages in the form.
- Real-time breakdown: The calculator applies HMRC rules and thresholds for the 2026/27 tax year to process the values.
- Display outputs: The visual graphs, donut charts, and tables are compiled dynamically to show your net take-home and deductions.
Real-World Examples
A basic calculation applying standard UK tax bands and allowances.
Calculation runs based on standard HMRC rules.
Factoring in a percentage of salary sacrifice or pension contributions.
Deductions are calculated and adjusted accordingly.
Related Calculators
Frequently Asked Questions & Detailed Tax Guide
What defines a small business in the UK and what are the main tax obligations?
In the UK, a small business is generally defined under the Companies Act 2006 as a company meeting at least two of the following criteria: turnover under £10.2m, balance sheet total under £5.1m, or fewer than 50 employees. Depending on the legal structure (sole trader, partnership, or Limited Company), small businesses must pay Corporation Tax on profits, Income Tax, and National Insurance, and register for VAT if taxable turnover exceeds £90,000. Additionally, if the business employs staff, it must operate PAYE and pay employer National Insurance contributions.
What are the key tax incentives available to UK small businesses?
The UK government offers several tax reliefs to support small business growth:
– Annual Investment Allowance (AIA): Offers 100% tax relief on qualifying plant and machinery up to £1m.
– Employment Allowance: Reduces employer Class 1 National Insurance liability by up to £10,500 in 2026/27 for eligible employers.
– Small Business Rates Relief: Offers up to 100% relief on business rates for properties with a rateable value of £12,000 or less.
Step-by-Step Mathematical Calculation: Employer NI and Employment Allowance
Let’s calculate the employer National Insurance liability for a small company with 3 employees, each earning a gross salary of £25,000 in the 2026/27 tax year. The secondary threshold is £5,000 and the employer NI rate is 15%. The company claims the £10,500 Employment Allowance:
- 1. Gross Salary per employee: £25,000.00.
- 2. Deduct Secondary Threshold: £25,000 – £5,000 = £20,000 taxable salary per employee.
- 3. Calculate NI per employee: £20,000 * 15% = £3,000.00.
- 4. Total Employer NI for 3 employees: £3,000 * 3 = £9,000.00.
- 5. Apply Employment Allowance: The allowance (£10,500) completely covers the £9,000.00 liability.
- 6. Net Employer NI Payable: **£0.00** (with £1,500 allowance remaining unused).
Tax Expert Pro-Tips: Retaining Cash in the Business
David Vance, CTA FCA, recommends: “For small companies, extracting all profits as salary or dividends is not always the best strategy. Keeping cash inside the company allows you to invest in capital assets that qualify for 100% AIA relief, lowering your Corporation Tax. You can also fund executive pension contributions directly from the business bank account, which is treated as an allowable business expense and escapes Corporation Tax, employer NI, and personal income tax.”
Legislative References
- Companies Act 2006 – Defines small company size limits.
- National Insurance Contributions Act 2014 – Establishes the Employment Allowance.
- Capital Allowances Act 2001 – Regulates the Annual Investment Allowance.