Updated for 2026/27

Director salary calculator 2026/27

Enter company profit and a director salary to see exactly what the salary costs the company (employer NI), what comes out in tax and NI personally, and what remains available for dividends.

Quick answer (2026/27): for most single-director companies the most efficient salary is £12,570. It uses the full personal allowance, so there is no income tax or employee NI on it, and the £1,135.50 of employer NI (15% above £5,000) is deductible for corporation tax. A company that can claim the £10,500 Employment Allowance pays no employer NI on it at all.

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
£5,000 vs £12,570Employer NI costCorp tax savingTake-home net
2026/27 tax year Company profit to personal take-home Salary plus dividends Retained cash shown

Limited company tax calculator

Company tax estimate

Adjust inputs below — results update instantly.

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Personal take-home is based on salary and dividends withdrawn. Post-tax profit not withdrawn is retained company cash.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

Free check · 2026/27

Find the salary that leaves you the most

We test every salary for your profit and show the split that leaves you the most, with the Corporation Tax to set aside.

Other income or a pension too?

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.

Salary / dividend optimiser

The most tax-efficient split on £75,000 profit

Most directors pay themselves a small salary and take the rest as dividends, but the exact salary level changes your total tax bill. This tests the standard director salary levels against your profit figure and shows which keeps the most in your pocket. It uses the same engine as the calculator above, so every figure ties out.

Most efficient for you
A salary of £12,570 leaves you with £53,403 personal take-home — the highest of the options below, with a total tax bill of £21,596.
Director salary Dividends Corp tax Personal tax Take-home vs best
£0 £58,875 £16,125 £7,075 £51,799 −£1,603
£5,000 £55,200 £14,800 £7,548 £52,651 −£752
£9,100 £51,734 £13,550 £7,775 £53,058 −£345
£12,570 ★ £48,801 £12,493 £7,967 £53,403 —
£50,270 £14,530 £3,408 £15,572 £49,228 −£4,174

Why £12,570 wins: Uses the full Personal Allowance; salary is corporation-tax deductible. Each option pays out all available post-tax profit as dividends. Change the company profit, region or pension in the calculator above to refresh these numbers.

Assumes the director has no other personal income unless entered above, and that the company can pay the salary. It does not model the £10,500 Employment Allowance (unavailable to most single-director companies), pension tapering or student loans. Estimates for planning only — not tax advice.

About this calculator

Director salary calculator 2026/27: what it covers

This calculator answers a narrower question than the salary-versus-dividend split: what should you actually set your director salary at? The realistic candidates for 2026/27 are £12,570 (the full Personal Allowance), £9,100, and £5,000 (the point at which employer National Insurance starts). It is about the salary level itself, before you decide anything about dividends.

For most single-director companies £12,570 usually wins. Salary is a deductible company expense, so every extra pound of salary reduces profit and therefore corporation tax at 19%, 25% or the 26.5% marginal rate. Above the £5,000 secondary threshold, employer NI of 15% does apply, but for the £5,000 to £12,570 slice the corporation tax saved on the larger deduction generally outweighs that NI cost, and you receive the whole amount tax-free because it sits within your Personal Allowance.

The main catch is the Employment Allowance. It would normally offset the first £10,500 of employer NI, but a company whose only employee is a single director generally cannot claim it. This tool assumes that position, so the employer NI above £5,000 shows as a genuine cost, and you can weigh a £12,570, £9,100 or £5,000 salary on a like-for-like basis.

Worked example

Why lifting the salary from £5,000 to £12,570 pays off

The decision comes down to one comparison: the employer NI a higher salary triggers, against the corporation tax that the larger deduction saves. Raising the salary by £7,570 (from £5,000 to £12,570) breaks down as:

Extra salary drawn £7,570
Employer NI now due (15%) £1,135.50
Corporation tax saved (19% of the deduction) ≈£1,654
Income tax / employee NI on the extra salary £0
Net take-home gain (£50k-profit company) ≈£463

The corporation tax saving of about £1,654 comfortably exceeds the £1,135.50 employer NI, and the extra £7,570 is received tax-free because it sits inside the Personal Allowance. The gain is modest (about £463 a year on £50,000 of profit, because on a £5,000 salary the unused allowance would shelter some dividends instead), but it is still a gain. That is why £12,570 usually beats £9,100 or £5,000 for a single-director company that cannot claim the Employment Allowance.

How it works

What each slice of salary costs and saves

  1. The first £5,000: no employer NI and no personal tax, and it saves Corporation Tax. Worth paying in almost every case where the company has the profit.2
  2. £5,000 to £12,570: the company pays 15% employer NI on this slice, but the slice and its NI save Corporation Tax at 19% or more and you still pay no income tax or employee NI. A small net gain.
  3. Above £12,570: income tax at 20%, employee NI at 8% and employer NI at 15% apply together. Dividends are cheaper from here.
  4. Between £6,708 and £12,570 the year counts towards your State Pension even though no employee NI is paid, because salary at the Lower Earnings Limit earns a qualifying year.2
  5. Directors' NI is worked out on an annual earnings period, so paying the salary unevenly through the year does not change the NI due.3
More worked examples

A low-profit year: £15,000

The company can only just afford a full salary. Taking everything that is left as dividends at each salary level:

Salary £0 £12,150.00
Salary £5,000 £13,096.77
Salary £9,100 £13,347.43
Salary £12,570 £13,559.57

Even at £15,000 of profit the full £12,570 salary leaves the most, because the salary is deductible and the dividends that would replace it come from taxed profit.

A director with a £30,000 job elsewhere

Same company profit of £60,000, but the director's Personal Allowance is already used by a £30,000 PAYE salary. Take-home from the company at each salary:

Salary £0 £35,864.87
Salary £5,000 £36,253.69
Salary £9,100 £36,282.09
Salary £12,570 £36,127.57

Of these levels £9,100 comes out best and £12,570 is no longer the answer: every pound of company salary is taxed at 20% because the allowance has gone, on top of employer NI. The free director pay plan check, which tests every salary in £250 steps, puts the best figure at £9,250. The levels from £5,000 to £12,570 are within a few hundred pounds of each other, so check with your own figures.

When the company can claim Employment Allowance

A company with a second employee paid above £5,000 (another director counts) can usually claim the £10,500 Employment Allowance.4

Employer NI on a £12,570 salary £1,135.50
Covered by Employment Allowance £1,135.50
Employer NI actually paid £0

With the allowance the case for £12,570 is stronger still. The calculator assumes a sole director who cannot claim it, so it shows the employer NI as a cost.

Mistakes and edge cases

Common salary mistakes

Running no payroll
A salary of £6,708 a year or more has to be paid through PAYE, with a report to HMRC each payday, even when no tax is due. Drawings relabelled as salary at the year end are not a substitute.
Copying last year's number
£9,100 was the best salary before April 2025, when the employer NI threshold was £9,100. It is now £5,000, and £9,100 is beaten by £12,570.
Assuming minimum wage always applies
A director with no employment contract is not normally covered by the National Minimum Wage, which is what makes a low salary possible. A director with a contract is.
Forgetting the State Pension
A salary under £6,708 does not earn a qualifying year. If you have no other income, that is a reason to pay at least that much.

Key figures

  • Employer National Insurance is 15% above £5,000 a year for 2026/27 and 2027/28. Budget 2026 Annex A
  • The Personal Allowance is £12,570 and the higher-rate threshold £50,270 for 2026/27 and 2027/28 (rest of the UK). 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

Director salary calculator 2026/27 — FAQs

Should I set my director salary at £12,570, £9,100 or £5,000?
For most single-director companies £12,570 is usually best. It uses your full Personal Allowance tax-free and maximises the deductible salary expense against corporation tax. It does trigger some employer NI above £5,000, but the corporation tax saved on the larger deduction typically more than covers that, making £12,570 slightly better than the lower £9,100 or £5,000 levels.
Why does £5,000 matter as a threshold?
£5,000 is the secondary threshold where employer National Insurance at 15% begins. A salary at or below £5,000 avoids employer NI entirely. Above it, the company pays 15% NI on the excess. This calculator highlights the £5,000 point so you can see exactly what the portion of salary above it costs in employer NI.
How does salary reduce my corporation tax?
Salary and the employer NI on it are deductible business expenses, so they come off profit before corporation tax is calculated. A higher director salary means lower taxable profit and a smaller corporation tax bill, at 19%, 25%, or the 26.5% marginal rate depending on your profit level. That deduction is the main reason a £12,570 salary tends to beat a lower one.
Why can't I use the Employment Allowance to cancel the employer NI?
The Employment Allowance (£10,500) would normally offset employer NI, but it is generally not available to companies where the sole employee is also a director. Single-director companies usually cannot claim it, so the employer NI above £5,000 is a real cost. This calculator assumes you cannot claim it.
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. Running payroll www.gov.uk/running-payroll
  2. Rates and thresholds for employers 2026 to 2027 www.gov.uk/guidance/rates-and-thresholds-for-employers-2026-to-2027
  3. CA44: National Insurance for company directors www.gov.uk/government/publications/ca44-national-insurance-for-company-directors
  4. Employment Allowance www.gov.uk/claim-employment-allowance
Verified against published UK government guidance.
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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

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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.
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Mettle by NatWest
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