How Tax Shrink calculations work
Tax Shrink is published by Bold Data Ltd. This page explains the model, the scenario it covers and the official sources used to configure it.
What the company calculator compares
Start with company profit after ordinary business expenses but before director pay. The calculator tests possible annual salaries, adds employer National Insurance, calculates Corporation Tax on the remaining taxable profit and treats the distributable balance as a dividend. It then calculates the director's personal Income Tax, employee National Insurance and estimated take-home income.
The recommended result is the tested salary and dividend combination with the highest estimated take-home.
Core assumptions
- One full-year owner-director and a 12-month accounting period.
- No associated companies and no Employment Allowance.
- England or Wales rates, using the selected personal tax year.
- All available distributable profit is paid as a dividend.
- No pension contributions, student loans, benefits in kind, other income, reliefs or prior losses.
Corporation Tax financial years and personal tax years do not have identical boundaries. The model is deliberately designed for a common, simplified planning scenario rather than every possible accounting period.
Official sources
Tax rules were last checked against these linked sources on 20 August 2026.
Limits and review
This model does not replace advice from a qualified tax professional. Tax Shrink is not HMRC guidance, and Bold Data Ltd does not claim that a tax professional has reviewed your result. Check the selected year, assumptions and official sources before relying on an estimate.
The calculation code is available in the public Tax Shrink repository. Material user-facing changes are recorded in the changelog.