Updated for 2026/27

Salary vs dividend calculator 2026/27

Adjust director salary and dividend amounts to find the extraction mix that minimises total tax across company and personal layers. See employer NI, dividend tax and retained profit side by side.

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
Optimal extraction mixEmployer NI vs dividendsDividend tax ratesNet personal income
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Personal take-home is based on salary and dividends withdrawn. Post-tax profit not withdrawn is retained company cash.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
Quick answer

For most directors the answer is a salary of £12,570 and the rest as dividends. Above the Personal Allowance, a pound of profit paid as dividends reaches you with less tax than the same pound paid as salary, at basic and higher rates alike.

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

Salary vs dividend calculator 2026/27: what it covers

This calculator focuses on one decision: the split between salary and dividends when extracting money from a limited company in 2026/27. The mix matters because the two are taxed on completely different systems. Salary is a deductible company expense that attracts employer National Insurance at 15% above £5,000, plus employee NI and income tax. Dividends carry no National Insurance at all but are paid from profit that has already borne corporation tax, and they have their own rates: 10.75% basic, 35.75% higher and 39.35% additional, after a £500 dividend allowance.

The common pattern is a £12,570 salary that uses the full Personal Allowance, topped up with dividends. After that salary, roughly £37,700 of dividends fall inside the basic-rate band up to £50,270 and are taxed at just 10.75%. Dividends above that point cross into the higher-rate band and jump to 35.75%, which is the step this tool is built to make visible.

The trade-off is straightforward once you see both sides together: salary triggers employer NI above £5,000 but reduces corporation tax as a deduction, while dividends avoid NI entirely but sit on top of already-taxed profit. Adjusting the split here shows where the combined company-and-personal tax is lowest for your profit level.

Worked example

£5,000 vs £12,570 salary on £50,000 of profit

The clearest way to see the split is to hold profit fixed and change only the salary. On a £50,000-profit company, drawing everything else as dividends, the two common salary levels compare like this:

£5,000 salary — employer NI £0
£5,000 salary — corporation tax £8,550.00
£5,000 salary — take-home £38,399.15
£12,570 salary — employer NI £1,135.50
£12,570 salary — corporation tax £6,895.95
£12,570 salary — take-home £38,861.96
Take-home gain from £12,570 salary +£462.81

The £12,570 salary triggers £1,135.50 of employer NI, but because the extra salary is deductible it cuts corporation tax by £1,654, and the whole amount is received tax-free inside the Personal Allowance. The net result is about £463 more in your pocket — which is why the answer is rarely all-dividends.

How it works

How the comparison works

  1. Hold the company's profit fixed and move money between the two routes. Every pound of salary is a company cost; every pound of dividend comes out of profit after Corporation Tax.
  2. Salary route: the company pays 15% employer NI above £5,000, and you pay income tax and 8% employee NI on salary above £12,570. In return the salary and the NI save Corporation Tax.34
  3. Dividend route: the company pays Corporation Tax first, then you pay 10.75%, 35.75% or 39.35% on dividends above the £500 allowance, with no National Insurance.1
  4. Compare what reaches your bank account from the same profit. The calculator tests the common salary levels on your profit and marks the one that leaves you the most.
More worked examples

The next £1,000 of profit, both ways

A director already on £12,570 with £50,000 of profit gets one more £1,000 of profit. Paid as salary, the company can afford £869.57 of pay plus the employer NI on it; paid as dividend, it is taxed in the company first.

As dividend: extra take-home £722.92
As salary: extra take-home £626.08
Dividend route keeps more by £96.84

The salary pound avoids Corporation Tax but pays 15% employer NI, 20% income tax and 8% employee NI. The dividend pound pays 19% Corporation Tax and 10.75% dividend tax. That gap is why salary above £12,570 rarely pays.

Is a bigger salary ever worth it? £120,000 of profit

Some directors raise salary to £50,270 to get a larger pensionable salary or a cleaner mortgage application. On a £120,000-profit company the tax cost of doing that is:

£12,570 salary + dividends: take-home £74,654.38
£50,270 salary + dividends: take-home £71,968.41
Employer NI on £50,270 £6,790.50
Cost of the higher salary £2,685.97

There can be non-tax reasons for a higher salary, but they have a price. If a lender is the reason, ask how it treats dividends before paying for a bigger payslip.

Mistakes and edge cases

Traps in the salary and dividend decision

Dividends without the profit to pay them
A dividend can only come from post-tax profits the company has built up. Salary can be paid from a loss; a dividend cannot.
Treating dividends as a monthly wage
Dividends need a board decision and a voucher each time. Regular drawings with no paperwork can be treated as a director's loan or as salary.
Forgetting the second director
With two directors both paid above £5,000, the company can usually claim the £10,500 Employment Allowance, which wipes out the employer NI on two £12,570 salaries.
Leaving out other income
A PAYE job, rent or a pension uses your allowances first, which can make a lower company salary the better choice. Enter it in the calculator.
Common questions

Salary vs dividend calculator 2026/27 — FAQs

Why not just take everything as dividends to avoid National Insurance?
Dividends avoid NI, but a modest £12,570 salary is usually still worth taking because it uses your tax-free Personal Allowance and is a deductible company expense that lowers corporation tax. Taking no salary wastes the allowance and the deduction. The optimal answer for most directors is a salary plus dividends, not one or the other.
How much of my dividends is taxed at only 10.75%?
After a £12,570 salary, dividends fill the rest of the basic-rate band up to £50,270, which is about £37,700 of dividends. The first £500 is covered by the dividend allowance, and the remainder in that band is taxed at 10.75%. Dividends above £50,270 move into the 35.75% higher rate.
What actually changes when I take more salary instead of dividends?
More salary increases the company's deductible expense (cutting corporation tax) but adds employer NI at 15% above £5,000, plus employee NI and income tax above £12,570. More dividends avoid NI but come from post-corporation-tax profit. The calculator nets these opposing effects so you can see the combined tax at each split.
Does the split affect corporation tax as well as personal tax?
Yes. Salary is deducted before corporation tax, so a higher salary reduces the company's corporation tax bill. Dividends are not deductible, so they do not reduce it. That is why the best split depends on both layers together, not personal tax alone.
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. Tax on dividends www.gov.uk/tax-on-dividends
  2. Income Tax rates and Personal Allowances www.gov.uk/income-tax-rates
  3. Rates and thresholds for employers 2026 to 2027 www.gov.uk/guidance/rates-and-thresholds-for-employers-2026-to-2027
  4. CA44: National Insurance for company directors www.gov.uk/government/publications/ca44-national-insurance-for-company-directors
Verified against published UK government guidance.
Power tools

More calculators

Limited company tax calculator
Company profit to take-home: Corporation Tax, employer NI, salary and dividend tax in one view.
Corporation tax calculator 2026/27
The company's bill at 19%, 25% or with marginal relief, and when it is due.
Director salary calculator 2026/27
£0, £5,000, £9,100 or £12,570: what each salary costs the company and saves you.
Dividend tax calculator 2026/27
Dividend tax on top of your salary, band by band, after the £500 allowance.
Available dividends calculator
How much the company can lawfully pay out after salary, pension and Corporation Tax.
Retained profit calculator 2026/27
What stays in the company when you take less than all the profit, and the tax that defers.
Director take-home pay calculator 2026/27
What reaches your bank account each year and month, and what to set aside for January.
Employer NI calculator for directors 2026/27
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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