Updated for 2026/27

Retained profit calculator 2026/27

Not all profit needs to be extracted. This shows what stays in the company after salary, employer NI, corporation tax and dividends, the retained cash that can be reinvested or extracted later.

Quick answer (2026/27): retained profit is what stays in the company after Corporation Tax and dividends. It carries no personal tax until you take it out, so leaving money in the company can keep your dividends in the 10.75% band this year.

Updated for 2026/27. Uses UK corporation tax, dividend tax and PAYE assumptions. Estimates only — not tax advice.

Calculator checked against GOV.UK and HMRC rules on (how we check).

Calculate company tax Read the guides
Retained company cashExtraction choicesCorp tax firstFuture flexibility
2026/27 tax year Company profit to personal take-home Salary plus dividends Retained cash shown

Limited company tax calculator

Company tax estimate

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Tax year 2026/27
How do you want to enter company income?
£

Enter profit before director salary, pension contributions and corporation tax.

£

Annual profit used in calculations = monthly profit × 12.

£
£
Expenses exceed estimated turnover — check your inputs.
£
£
Expenses exceed estimated turnover — check your inputs.
£
£

Amount you plan to withdraw from available post-tax company profit.

Selected dividends exceed available post-tax company profit.
£
£
£47,749 personal take-home / year £3,979/mo
Personal take-home is based on salary and dividends withdrawn. Post-tax profit not withdrawn is retained company cash.
Monthly net
£3,979
Total tax
£18,450
Effective rate
24.6%
Personal take-home£47,749
Dividend tax£4,821
Employer NI£1,136
Corporation tax£12,493
Company pension£0
Retained company cash£8,801
Show detailed breakdown ▼
Director salary£12,570.00
Employer National Insurance£1,135.50
Corporation tax£12,493.04
Salary income tax£0.00
Employee National Insurance£0.00
Dividend tax£4,821.25
Retained company cash£8,801.46
Personal take-home£47,748.75
Effective tax rate24.60%
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HMRC 2026/27 · Methodology

Updated for 2026/27. Written and reviewed by James Whitfield against current GOV.UK and HMRC guidance · Editorial standards · Methodology. Estimates for planning only — not tax, accounting or financial advice.

Figures reviewed for the 2026/27 tax year. Source: GOV.UK.

About this calculator

Retained profit calculator 2026/27: what it covers

This calculator shows the profit that stays inside the company once corporation tax has been charged and any dividends have been paid out. It starts from taxable profit, removes the corporation tax due at 19%, 25% or the 26.5% marginal band rate, and then subtracts the dividends drawn, leaving the retained figure that rolls forward as reserves.

Retained profit has already had corporation tax applied, but it has not yet been taxed in anyone's hands personally. Directors often choose to leave profit in the company rather than extract everything each year — to fund reinvestment, to smooth dividends across good and lean years so they stay inside lower dividend bands, or to make employer pension contributions.

The result is a running measure of accumulated, undistributed profit. It is money the company owns rather than money you have received, and extracting it later still triggers personal tax at that point, so the retained figure is best read as reserves available for future decisions rather than take-home pay.

How it works

How retained profit is worked out

  1. Take profit before your salary and deduct the salary, employer NI and any employer pension contribution.
  2. Deduct Corporation Tax on what is left to get post-tax profit.1
  3. Deduct the dividends you choose to pay. The remainder is this year's retained profit and adds to the reserves in the balance sheet.3
  4. Next year, the reserves are available for dividends alongside that year's profit, subject to the company still having the cash.
More worked examples

Two uneven years: take it all, or smooth it

A company makes £100,000 one year and £30,000 the next. For illustration both years use 2026/27 rates and a £12,570 salary.

Take everything each year: dividend tax £14,536.83 + £1,365.09
Take £37,700 in year 1, retain the rest £3,999.00
Year 2: take £42,675.01 (that year's profit plus the reserve) £5,777.57
Dividend tax over two years, all-out £15,901.92
Dividend tax over two years, smoothed £9,776.57
Saved by smoothing £6,125.35

The saving comes from keeping dividends below £50,270 of total income in the big year, then using the spare basic-rate band in the quiet year. Corporation Tax is the same either way.

Using retained profit for a pension contribution

The same £100,000 year, taking £37,700 of dividends, with a £20,000 employer pension contribution from the profit that would have been retained.

Retained without the pension £29,476.46
Retained with the pension £14,776.46
Corporation Tax saved £5,300.00
Take-home this year £46,271.00 (unchanged)

The pension contribution moves money out of the company with no dividend tax at all, and costs the reserves less than £20,000 because it saves Corporation Tax.

Mistakes and edge cases

Misunderstandings about retained profit

Retained profit is cash
It is a balance-sheet figure. It may already be spent on equipment, tied up in unpaid invoices, or owed to HMRC as Corporation Tax.
Retained profit is tax-free
Only the personal tax is deferred. It is taxed as a dividend when you take it out, at the rates in force then.
Leaving money in forever
A company that mainly holds cash or investments instead of trading can be taxed differently, and taking reserves out on closure has its own rules. Plan the exit before reserves build up.
Retaining to fix last year
You cannot move a dividend already paid into a different tax year. Smoothing works only if you decide before the dividend is declared.
Same company, different choices

What retaining profit does on £100,000 of profit

One company, a £12,570 salary, and four different dividend choices. Corporation Tax is the same in every row. What changes is how much personal tax you pay this year.

Dividends takenRetained in companyDividend tax this yearTake-home this year
£0£67,176£0£12,570
£20,000£47,176£2,096£30,474
£37,700£29,476£3,999£46,271
£60,000£7,176£11,971£60,599

Retained profit is not tax-free. Dividend tax is due when you take it out later, at the rates then in force.

Key figures

  • Corporation Tax is 19% on profits up to £50,000 and 25% from £250,000, for the financial years from 1 April 2026 and 1 April 2027. Budget 2026 Annex A
  • Between those limits marginal relief applies, with a standard fraction of 3/200 in the financial years 2026 and 2027. Budget 2026 Annex A
  • Dividends are taxed at 10.75%, 35.75% and 39.35% above a £500 allowance, for 2026/27 and 2027/28. Budget 2026 Annex A

Checked 1 November 2026.

Common questions

Retained profit calculator 2026/27 — FAQs

Has retained profit already been taxed?
It has had corporation tax charged on it — at 19%, 25% or the 26.5% marginal rate depending on profit level — but no personal tax has been paid. Personal tax only arises later, when the money is taken out as dividends or salary, or is dealt with when the company is wound up.
Why leave profit in the company instead of taking it out?
Common reasons are reinvesting in the business, keeping funds available for cash flow, and smoothing dividends across years so drawings stay within the basic-rate dividend band rather than spilling into the 35.75% higher rate. Retained profit can also be routed into an employer pension contribution, which is an allowable expense.
How is retained profit taxed when I finally take it out?
If extracted as dividends it is taxed personally at 10.75%, 35.75% or 39.35% depending on your income band, after the £500 dividend allowance. There is no further corporation tax to pay on money already taxed, but the personal dividend charge applies in the year you draw it.
Is retained profit the same as cash in the bank?
No. Retained profit is an accounting measure of accumulated, undistributed profit, while the bank balance also reflects unpaid bills, tax owed and money tied up elsewhere. A company can show healthy retained profit yet hold much less spare cash, so check both before drawing a dividend.
Sources & references

Where these figures come from

The rates and rules on this page are drawn from the official UK government sources below, using the confirmed 2026/27 figures. Each link opens the relevant HMRC, GOV.UK or Companies House page in a new tab.

  1. Corporation Tax rates and reliefs www.gov.uk/corporation-tax-rates
  2. Taking money out of a limited company www.gov.uk/running-a-limited-company/taking-money-out-of-a-limited-company
  3. Accounts and tax returns for private limited companies www.gov.uk/prepare-file-annual-accounts-for-limited-company
Verified against published UK government guidance.
Power tools

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£0, £5,000, £9,100 or £12,570: what each salary costs the company and saves you.
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Available dividends calculator
How much the company can lawfully pay out after salary, pension and Corporation Tax.
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What reaches your bank account each year and month, and what to set aside for January.
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Employer NI on a director's salary, and when Employment Allowance cancels it.
Practical guides

Limited company guides

Limited Company Tax in Scotland 2026/27: Salary, Dividends and Corporation Tax
In Scotland, corporation tax is the same 19%–25% as the rest of the UK and dividends are taxed at the UK rates of 10.75%, 35.75% and 39.35%. Only a director's salary uses Scottish income tax bands. 2026/27 examples.
Corporation Tax Rates 2026/27: 19%, 25% and Marginal Relief
Corporation tax rates 2026/27: 19% on profits up to £50,000, 25% over £250,000, marginal relief between (26.5% marginal rate). £100,000 profit pays £22,750. Table and examples.
Optimal Salary and Dividend Split for Directors 2026/27
How to calculate the tax-efficient salary and dividend combination for a limited company director in 2026/27, covering corporation tax, income tax, NI and the dividend allowance.
Salary vs Dividends 2026/27: The Optimal Split for Company Directors
The tax-efficient salary vs dividends split for UK company directors in 2026/27: a £12,570 salary, then dividends taxed at 10.75%. Corporation tax, the £500 dividend allowance, employer NI and a full worked example extracting £50,000.
Director's Loan Account 2026/27: s455 at 35.75%, 30-Day Rule
Overdrawn director's loan account in 2026/27: s455 at 35.75% if not repaid 9 months and 1 day after year end, refundable later; £10,000 benefit-in-kind limit; 30-day rule.
Limited Company Allowable Expenses: A Practical Guide 2026/27
What a limited company can legitimately deduct as business expenses, reducing corporation tax. Covers running costs, director expenses, travel, equipment, and home office claims.
Getting set up

Business bank accounts

A limited company must keep its finances separate from personal accounts. These accounts are free to open.

Starling Business
Permanently free, no monthly fee. A fully licensed UK bank - eligible deposits are FSCS protected up to £120,000 per eligible depositor, per authorised bank (brands sharing one banking licence share one limit). A limited company's account is protected separately from your personal accounts. Accepts limited companies and sole traders. 0.7% on Post Office cash deposits.
Open an account →
Tide
Free to open. Built-in invoicing and expense tracking. 20p per outgoing transfer on the free tier (Tide Plus is £9.99/month). Funds are safeguarded as e-money, not FSCS protected. Usually has a new-account offer.
Open an account →
Mettle by NatWest
Free. Single-director limited companies only (max two owners, one account user). Includes FreeAgent bookkeeping at no extra cost. Funds are safeguarded as e-money, not FSCS protected. No cash deposits.
Open an account →
Registering at Companies House

Companies House now charges £100 to register a limited company online (up from £50 in February 2026). Same-day registration is £156, through software filing only (for example via a formation agent). You can register directly at gov.uk or through a formation agent.

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