UK director pay calculator — salary vs dividend
Compare salary and dividend strategies for UK company directors in 2026/27. Income tax, NI, dividend tax, and corporation tax modelled together.
What is the optimal salary and dividend split for a UK director?
For 2026/27 the trade-off is straightforward. Salary is deductible against corporation tax (saving 19–25% depending on profit band) but attracts income tax at 20–45% and employee NI (8% above £12,570, 2% above £50,270), plus employer NI at 15% above the £5,000 secondary threshold. Dividends pay no NI but are taxed at 10.75% / 35.75% / 39.35% after the £500 dividend allowance (basic and higher rates rose by 2 points from 6 April 2026 — Autumn 2025 Budget). A common starting position for an owner-director: salary at £12,570 to use the personal allowance and qualify for State Pension, dividends to top up. Sole-director companies cannot claim Employment Allowance — the right split depends on your specific position.
Setup
Company & Income
Personal Tax Details
Best Estimated Take-Home
£66,668.15
Based on the assumptions selected, "Minimal Salary + Max Dividends" appears most tax-efficient.
Salary
£12,570.00
Dividends
£67,176.46
Income Tax
£0.00
Employee NI
£0.00
Dividend Tax
£13,078.31
Student Loan
£0.00
Corporation Tax
£19,118.04
Effective Tax Rate
16.4%
Estimated Net Take-Home
£66,668.15
83.6% retained
Scenario Comparison
| Scenario | Salary | Dividends | Total Tax | Net |
|---|---|---|---|---|
| Minimal Salary + Max Dividends ✓ | £12,570.00 | £67,176.46 | £13,078.31 | £66,668.15 |
| NI Threshold + Dividends | £12,570.00 | £67,176.46 | £13,078.31 | £66,668.15 |
| Higher Salary (£50,270) + Dividends | £50,270.00 | £34,780.99 | £22,125.83 | £62,925.16 |
| Salary Only | £80,000.00 | £0.00 | £23,042.60 | £56,957.40 |
| Dividend Heavy | £6,396.00 | £72,395.03 | £14,839.57 | £63,951.46 |
Take-Home Comparison
Insight
Dividends are generally taxed at lower personal rates than salary, but they come from post-corporation-tax profits.
A salary up to the personal allowance (£12,570) is usually NI-free for employees and avoids income tax entirely.
For personalised advice on the most efficient structure for your circumstances, speak with RR Accountants.
Disclaimer: This tool provides general estimates for planning purposes only. Results depend on the assumptions entered and do not constitute tax advice. Your actual position may differ. Always consult a qualified accountant.
Want a more tax-efficient remuneration strategy?
The best mix of salary, dividends, pension, and company profit extraction depends on your wider tax position, business structure, and goals. RR Accountants helps directors and business owners structure income properly.
Get Expert Help
What this optimiser helps you compare
Salary vs Dividends
Compare different remuneration splits to see how take-home income changes.
Tax Efficiency
Estimate how tax, National Insurance, and dividend tax affect the overall outcome.
Scenario Planning
Review multiple common director pay structures side by side.
Advisory Context
Use the numbers as a starting point before making real tax planning decisions.
This optimiser is designed to provide a practical estimate for planning purposes. For tailored remuneration advice, speak with RR Accountants.
Frequently Asked Questions
Need help with director pay, dividends, or tax planning?
RR Accountants helps UK directors and growing businesses with tax planning, bookkeeping, payroll, year-end accounts, company compliance, and ongoing financial advice.