Calculating Retention Rate

Earnings Tracker calculates how much of what you earn actually ends up in your pocket!

Calculating retention rate can be useful in determining how tax efficient your business operations are. The calculation is made by looking at what the turnover of your company is, and taking away from this value items such as income tax, corporation tax, and national insurance contributions. This then gives you a percentage value, which indicates how much of what your company earns is paid to you.

Notes: The retention rate calculation only really applies in situations where there is a single contractor who generates all the revenue for the company, and he/she is the only person drawing a salary, taking bonuses and/or taking dividend payments.

Once your company has multiple employees, all generating revenue for the company and all taking salaries and dividend payments, the retention rate value is no longer of any real significance, in which case it can be easily hidden from the main spreadsheet.

The retention rate also does not take into account any additional PAYE (Pay As You Earn) income tax you may owe if you are a higher rate tax payer.

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