Work out your take-home pay from salary and dividends, then compare salary options to see what could leave you better off. Includes 2026/27 and 2025/26 Income Tax, dividend tax and employee National Insurance. Employer NI is a separate company cost.
Work backwards from your desired annual take-home. Compare salary-led pay, using up to £500 of dividends where cheaper, against £12,570 salary plus dividends (a lower salary for small targets). Company profit before director pay is used only to calculate current-year Corporation Tax relief across the tax bands. See the recommended salary and dividend amounts and company cost after relief. Selecting Employment Allowance assumes up to £10,500 is available with none used elsewhere.
For England, Wales and Northern Ireland, standard annual director NI and salary/dividend income only. The comparison assumes a full-year trading company with no associated companies. Current-year CT relief is capped at the current-year CT bill; loss carryback and carryforward relief are not assumed. Available cash and distributable reserves are not assessed. Other income, pensions and student loans are excluded. This is a planning estimate, not personalised financial advice.
A salary can qualify for Corporation Tax relief but may attract employee and employer NI, while dividends come from post-tax profits and can create personal dividend tax. The right mix depends on company profits, your personal income and allowances, so neither route guarantees a saving.
For 2026/27, dividend rates above available allowances are 10.75%, 35.75% and 39.35%, with a £500 dividend allowance. Salary and other income use tax-band space, so reserve tax at the bands your dividends actually fall into rather than assuming they are all basic-rate.
Only if the company has sufficient distributable profits after allowing for Corporation Tax and other liabilities. Keep the required dividend records and check reserves before paying yourself; cash in the bank alone does not establish that a dividend is lawful.
A company cannot claim if its only employee liable for employer National Insurance is its sole director. Other employers must meet the eligibility rules, and any allowance already used elsewhere reduces what is available.
A salary at or above the annual Lower Earnings Limit of £6,708 in 2026/27 may help secure a qualifying NI year, even if no employee NI is payable. A lower salary may not provide a qualifying year through this employment, so check your NI record and any other credits.
Budget for gross salary, employer NI and dividends, allowing for qualifying Corporation Tax relief on salary costs. The planning comparison tests a salary-led option against salary up to £12,570 plus dividends; it excludes other income, pensions, loans and personal reliefs and does not confirm available company funds.