What we assume, in the open.
Every tax tool makes interpretations. Most hide them. Ours are listed here, each with the basis that makes it defensible. Our stance throughout is standard practice: what a competent UK accountant would do for a typical client — not aggressive schemes, and not academic over-caution either. All rates are 2026/27, England, Wales & Northern Ireland.
All calculations use the 2026/27 tax year
Every rate, band and allowance is from the tax year that began 6 April 2026, for England, Wales and Northern Ireland. Scottish income tax rates and bands are not modelled.
Basis: Single-year consistency; rates from GOV.UK for 2026/27.
Forecasts hold today's rates and thresholds constant
Multi-year projections assume 2026/27 rules continue unchanged. The main thresholds are legislated to stay frozen until April 2031, so for most of the forecast window this is what the law currently says will happen. Already-announced future changes we do NOT project (they may still change): from April 2027 property and savings income move to separate, higher rates (22%/42%/47%) and the cash ISA limit falls to £12,000; from April 2029 pension salary sacrifice is capped at £2,000/year. Holding 2026/27 rates makes our ISA and splitting forecasts conservative — the real future saving is likely larger. All figures are nominal — no inflation adjustment.
Basis: Autumn Budget 2025 extended the threshold freeze to April 2031 and announced the queued changes.
Owners can enter just their draw — we infer the company profit
If you tell us your salary and dividends but not your company's profit, we assume the company earns exactly enough to fund them: your salary plus employer costs, plus your dividends grossed up for corporation tax (inverting the small-profits rate, marginal relief and main rate precisely). The inferred profit is held fixed while levers are applied, so company-cost levers genuinely reduce corporation tax. If your company earns more than it pays you, enter the real profit — retained earnings change the picture.
Basis: Exact inversion of the CT computation; conservative (minimum-profit) assumption, stated on the corporation tax line.
Savings and investment income is derived from balances × rates
Where you list accounts (balance and interest rate, or expected return), taxable interest is balance × your actual rate, and taxable dividends on general investment accounts use a 3% income yield within your expected total return. Company owners' portfolio income is modelled as interest so their dividend figures stay company-only. Forecasts use your balance-weighted rates.
Basis: Your own rates where given; 3% dividend-yield convention disclosed here and in the register.
Defined-benefit (public sector) pensions: contributions from pay, income at retirement
DB scheme contributions are treated as net pay — deducted from taxable salary automatically (full marginal relief, no NI relief), which is how NHS, Teachers', Civil Service and similar schemes work. There is no pot: from your retirement age we model the expected annual pension you told us as taxable income (no NI on pension income). We do not model the ×16 annual-allowance valuation of DB accrual — high accruers near the £60k allowance should check with their scheme.
Basis: Net pay arrangements standard in public-sector schemes; DB annual-allowance valuation (PTM053301) out of scope, stated.
Cautious / average / optimistic scenarios are anchored to FCA projection rates
The three return scenarios shift growth around the FCA's prescribed projection rates for tax-advantaged products (2% / 5% / 8% nominal). Where you gave account rates, scenarios shift YOUR rates by the same delta rather than replacing them. Venture outcomes (failure fractions and multiples for VCT/EIS/SEIS) are illustrations shaped by pooled UK venture-capital return data — there is no official failure-rate statistic, and we say so wherever they appear.
Basis: FCA COBS 13 Annex 2 2.3R (2%/5%/8%); British Business Bank UK VC Financial Returns (pooled TVPI ≈ 1.8x) as the shape anchor.
EIS/SEIS loss relief and CGT treatment
EIS gives 30% and SEIS 50% income tax relief, capped at your bill. Growth is CGT-free after the 3-year holding period provided the income tax relief isn't withdrawn. If a company fails, the allowable loss is the amount invested NET of the relief you kept, and can be set against income at your marginal rate — our venture panels show that cushion explicitly. VCT dividends are tax-free within the £200,000 permitted maximum and VCT disposals are CGT-exempt (so losses aren't allowable either).
Basis: s131 ITA 2007 and HMRC VCM20130 (loss net of relief); TCGA 1992 s150A/s150E (CGT exemption); ITTOIA 2005 s709 and TCGA 1992 s151A (VCT).
Lifetime ISA
£4,000 a year (inside the £20,000 ISA allowance) with a 25% government bonus, for accounts opened before age 40, contributable to 50. We model the bonus as wealth, not as a tax saving. Withdrawals before 60 for anything other than a qualifying first home carry a 25% charge — we assume you don't make them.
Basis: GOV.UK Lifetime ISA rules.
Paying a partner through the company assumes real, commercially-paid work
The salary is deductible only where it is wholly and exclusively for the trade and commensurate with the duties actually performed — and it must actually be paid. With a second employee above the £5,000 NI threshold the company qualifies for the £10,500 Employment Allowance, which our maths applies. We cap nothing: you are responsible for the commercial-rate judgement.
Basis: HMRC BIM47105/BIM47106; GOV.UK Employment Allowance guidance (single-director companies excluded).
EV salary sacrifice keeps its tax advantage deliberately
Sacrificing salary for most benefits triggers the optional-remuneration rules (you're taxed on the salary given up). Cars emitting 75g/km or less are exempt, so an EV lease through your employer is taxed only on the 4% benefit-in-kind (2026/27). We model your side (income tax + NI saved, BIK added); employer scheme fees and terms vary.
Basis: ITEPA 2003 s120A; HMRC EIM44060; GOV.UK appropriate-percentage tables.
Trivial benefits are capped and conditional
Up to £50 per benefit, not cash or a cash voucher, not contractual, not a reward for work, and at most £300 a year for directors of close companies. We model the £300 as a deductible company cost with no benefit-in-kind.
Basis: ITEPA 2003 s323A.
Income splitting works for unmarried couples — with a CGT difference
Income follows beneficial ownership, so outright gifts of income-producing assets between unmarried partners are effective for income tax. But the spousal no-gain/no-loss rule doesn't apply: gifting investments standing at a gain is a disposal at market value and can trigger CGT. Cash transfers are clean. The gift must be genuinely outright — no strings, no routing the income back.
Basis: HMRC TSEM4200/TSEM4205; TCGA 1992 s58 (spouses only) and s17 (market value).
Gift aid modelling
Donations are grossed up by 25% (basic rate). The gross donation extends your basic-rate band and reduces adjusted net income — which is what drives the £100k personal-allowance taper and the child benefit charge. You must pay enough tax to cover the charity's reclaim; giving more than you earn doesn't work.
Basis: ITA 2007 s414; GOV.UK / LITRG guidance on adjusted net income.
A company mobile phone is tax-free even with personal use
One phone per employee, with the contract in the company's name, is an allowable company expense and creates no taxable benefit — personal use included. Advice saying the phone must be 'solely for business' overstates the rule.
Basis: ITEPA 2003 s319; HMRC manual EIM21779/EIM21780. Standard practice.
Company electric cars are taxed at 4% of list price (2026/27)
A zero-emission company car creates a benefit in kind of 4% of its list price, which you pay income tax on; the company also pays Class 1A National Insurance on it, and gets corporation tax relief on the lease cost. The BIK rate rises 1 percentage point each year to 2028/29 — our single-year figure uses 4%.
Basis: GOV.UK appropriate-percentage tables, 2026/27.
The 'optimal salary' for a company owner is £12,570
We model the common structure: salary at the personal allowance (preserving state pension credits), remainder as dividends. Employer NI of about £1,136 arises on this salary for a sole-director company (which cannot claim the Employment Allowance), but corporation tax relief on the salary more than offsets it in typical cases.
Basis: Standard practitioner guidance for single-director companies.
Income splitting between spouses uses outright transfers
Shifting dividends or savings interest to a lower-earning spouse assumes an unconditional transfer of the underlying shares or accounts between spouses (no capital gains tax arises on inter-spouse transfers). Dividend-waiver and non-voting-share arrangements are NOT modelled — those attract anti-avoidance risk.
Basis: Settlements legislation as applied in Jones v Garnett (Arctic Systems); inter-spouse exemption s58 TCGA 1992.
Pension annual allowance: this year's taper, plus the carry-forward you enter
We apply the £60,000 annual allowance with the high-income taper (threshold £200,000 / adjusted £260,000, floor £10,000). If you enter unused allowance carried forward from the previous three years, we add it to this year's cap and trust your figure — it comes from your own pension statements, and your provider or accountant can confirm it. Leave it blank and our cap stays conservative.
Basis: GOV.UK annual allowance rules; carry-forward per your own records (PTM055100).
Student loan repayments are modelled like a tax
If you tell us your plan, we deduct 9% of income over your plan's threshold (Plan 1 £26,900, Plan 2 £29,385, Plan 4 £33,795, Plan 5 £25,000 for 2026/27), plus 6% over £21,000 for a postgraduate loan, and include it in your marginal rate and in what each lever is worth. Salary sacrifice reduces repayments; relief-at-source pension contributions don't. Unearned income (interest, dividends, rent) counts only once it exceeds £2,000. We assume the loan runs for the whole forecast — if you're close to paying it off, the later years overstate the cost.
Basis: GOV.UK rates and thresholds for employers 2026/27; SLC repayment rules.
Bed & ISA respects capital gains tax
Selling investments to move them into an ISA is a disposal. If you give us a rough figure for how much of your investment account is growth, we size the yearly move so the realised gain stays inside the £3,000 annual exempt amount, and we say so when we trim it. Gains above the exemption would be taxed at 18% within your unused basic-rate band and 24% above — a yearly rhythm beats one big taxed shift.
Basis: TCGA 1992; 2026/27 exempt amount and rates from GOV.UK. Your gain percentage is your estimate.
Exit planning uses Business Asset Disposal Relief at 2026/27 rates
The 'sell the company' sketch taxes the first £1m of lifetime qualifying gains at 18% (the BADR rate from April 2026) and the rest at the main CGT rates stacked on your income. Qualifying needs a 5%+ shareholding in a trading company where you're an officer or employee, held for two years — conditions we can't verify for you. This is a sketch to take to an accountant, not a computation of your actual disposal.
Basis: TCGA 1992 s169H+; Autumn Budget rate path (BADR 18% from April 2026).
Profit left in the company is tracked nominally
When your declared profit exceeds what you draw, the post-corporation-tax remainder accumulates as a company cash pot in the forecast. We hold it flat (no interest or investment growth inside the company) and count it in net wealth with a label that extraction tax is still pending — drawing it later as dividends, salary or a BADR-relieved sale each has its own cost.
Basis: Conservative simplification, stated on every figure that includes it.
Assumed returns and yields
Cash interest 4%; investment total return 5% (of which 3% is taxable dividend yield); pension growth 5%. The home page's 'if you invested it' figure uses 10% as an illustration of long-run equity returns and is labelled as such. None of these are guarantees.
Basis: Long-run market averages; disclosed on every figure that uses them.
ISA and pension returns are modelled tax-free
Money moved into an ISA stops generating taxable interest or dividends from the day it moves; we assume the full £20,000 annual ISA allowance is available to each person unless you tell us otherwise.
Basis: ISA rules, GOV.UK.
VCT and EIS reliefs are shown gross of investment risk
We show the income tax relief (VCT 20%, EIS 30% for 2026/27 subscriptions, both capped at your tax bill) and tax-free dividends where relevant. These are high-risk, illiquid investments with minimum holding periods (VCT 5 years, EIS 3 years) — relief is clawed back if you sell early. The relief is not a return.
Basis: GOV.UK venture capital schemes guidance; risk stated wherever shown.
Child benefit is assumed claimed while eligible
The High Income Child Benefit Charge claws back 1% of the benefit per £200 of the higher partner's income over £60,000 (all of it at £80,000). We assume the benefit keeps being claimed and the charge paid; children are assumed to remain eligible for the length of the forecast.
Basis: GOV.UK HICBC rules 2026/27.
Owner dividends are capped at post-tax company profit
If you ask to draw more in dividends than the company earns after corporation tax, we cap the dividends at what's legally distributable from this year's profit (ignoring retained earnings from earlier years, which is conservative).
Basis: Companies Act distributable-profits rules, simplified.
Annual NI, precise taper
National Insurance is computed on annual figures (exact for directors; a very close approximation for employees paid evenly). The personal allowance taper is computed to the pound rather than in HMRC's £1 steps — differences are pennies.
Basis: Directors' annual earnings period rules; immaterial rounding.
This is guidance, not regulated financial advice
Everything here is an illustration built from the rules as published, to help you have better conversations with your accountant or adviser. It is not personal financial, investment or tax advice, and no figure is a recommendation to buy any product.
Basis: We are not FCA-authorised and do not provide regulated advice.