The single most useful number for a director paying themselves from a limited company is the top of the basic-rate band. Below it, dividends are taxed at 10.75%. Above it, the rate jumps to 35.75%. Here is how much you can take for 2026/27, what it costs, and what to do with profit above the line.
Written by James Whitfield · Last checked 19 October 2026 · Checked against 2026/27 HMRC rates · Editorial standards · Methodology
For 2026/27 a director can take £50,270 before paying higher-rate tax: a £12,570 salary plus £37,700 of dividends. The salary is tax-free, the first £500 of dividends is covered by the allowance and the other £37,200 is taxed at 10.75%, so the total personal tax is £3,999 and you keep £46,271.
To pay that from a standalone company you need about £60,249 of profit before salary. Every £1 of dividend above £50,270 of total income is taxed at 35.75%, and between £100,000 and £125,140 the Personal Allowance taper pushes the effective rate to 58.25%.
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Dividends are added on top of your salary and other income. The rate depends on which band each pound of dividend lands in.1 The bands are the UK income tax bands, even for Scottish taxpayers, because dividend tax follows UK rates.2
| Up to £12,570Personal Allowance; the usual director salary | 0% |
| First £500 of dividendsDividend allowance (it still uses up band) | 0% |
| £12,571 to £50,270Basic-rate dividends | 10.75% |
| £50,271 to £100,000Higher-rate dividends | 35.75% |
| £60,000 to £80,000 (with children)High Income Child Benefit Charge: 1% of Child Benefit per £200 over £60,000 | + HICBC |
| £100,000 to £125,14035.75% plus the Personal Allowance taper (£1 lost per £2) | 58.25% effective |
| Over £125,140Additional-rate dividends | 39.35% |
Priya is the only director and shareholder, with no other income, in England. Her company makes £60,248.71 before her salary.
| SalaryEmployer NI £1,135.50 (15% above £5,000) | £12,570.00 |
| Taxable profit | £46,543.21 |
| Corporation tax at 19% | £8,843.21 |
| Dividend paid | £37,700.00 |
| Dividend tax: £500 at 0% + £37,200 at 10.75% | £3,999.00 |
| Priya keeps | £46,271.00 |
If the same company made £80,000, the salary and a £37,700 dividend would still leave £14,776.46 of post-tax profit in the company. Drawing it all would add £9,493.88 of take-home but cost £5,282.58 of extra dividend tax, most of it at 35.75%.
Leave it in the company. Retained profit has paid corporation tax but no personal tax. You can draw it in a later year when your other income is lower, so it is taxed at 10.75% instead of 35.75%.
Pay it into a pension. An employer pension contribution is deductible for corporation tax, saving 19% to 26.5%, and has no National Insurance. It must be within your annual allowance (£60,000, with carry-forward of unused allowance from the previous three years).3
Share the income. If a spouse or business partner works in the company and owns shares, their own basic-rate band can take dividends at 10.75%. See the two-director guide for the rules and the settlements risk.
If you or your partner claim Child Benefit, the High Income Child Benefit Charge starts at £60,000 of adjusted net income and takes back 1% of the benefit for every £200 above it, so all of it is repaid at £80,000.4 Dividends count towards that income.
Above £100,000, the Personal Allowance falls by £1 for every £2 of income and is gone at £125,140.2 For a director on £12,570 salary, each £1 of dividend in that range costs 58.25p in tax. Employer pension contributions do not count as your income, which is why they are the usual way to stay under £100,000.
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£50,270 for 2026/27: a £12,570 salary plus £37,700 of dividends, assuming no other income. Dividends inside that band are taxed at 10.75% after the £500 allowance, and the bill is £3,999.
No. The first £500 of dividends is taxed at 0%, but it still counts towards the £50,270 limit, so you can take £37,700 of dividends (not £38,200) on a £12,570 salary before reaching the higher rate.
35.75% for 2026/27, up to £125,140 of total income, then 39.35%. Between £100,000 and £125,140 the Personal Allowance taper makes the effective rate on extra dividends 58.25% for a director on a £12,570 salary.
About £60,249 before salary for a standalone company: £12,570 salary and £1,135.50 employer NI, 19% corporation tax on the remaining £46,543.21, leaving £37,700 to pay as a dividend.
For dividends, no: dividend tax uses UK bands, so £37,700 of dividends on a £12,570 salary is still the basic-rate limit. Scottish rates only apply to salary and other non-savings income.
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.
The limited company tax calculator turns this guidance into a concrete estimate for corporation tax, dividends and personal take-home, based on 2026/27 HMRC rates.