Free · No email required to see your result
Salary vs Dividend Calculator
Compare take-home pay across salary only, a low salary plus dividends, and dividends only, for the same pot of company profit.
Step 1 · Your company
Profit left in the company before you pay yourself, after other costs but before Corporation Tax.
From elsewhere, if any.
The £10,500 Employment Allowance needs at least one other employee earning above £5,000. A company with only a director does not qualify.
Step 2 · Your salary and dividend mix to test
Around £12,570 is a common choice. The rest of the pot, after tax, comes out as dividends.
How is this calculated?
Each scenario starts from the same company profit. Salary (plus employer NIC on it) is deducted first, since it's a Corporation Tax-deductible expense. Corporation Tax is then charged on what's left at 19% up to £50,000, 25% above £250,000, with marginal relief in between. Whatever remains after Corporation Tax is paid out as dividends.
On the personal side, salary is taxed via income tax (marginal stacking) and employee NIC (8% between £12,570 and £50,270, 2% above). Dividends are taxed after a £500 allowance, stacked on top of salary and other income, at 10.75% / 35.75% / 39.35%.
Employer NIC is 15% above the £5,000 secondary threshold. The £10,500 Employment Allowance can reduce this to nil, but only if the company has another employee earning above that threshold, a sole director with no other staff does not qualify, which is why the calculator asks directly rather than assuming.
These figures are for guidance only, based on 2026/27 rates for a single director-shareholder with one company, rUK tax rates, and no other reliefs. Speak to us before making decisions.
Why salary and dividends are taxed so differently
Salary is a company expense, deducted before Corporation Tax, but it carries employee and often employer National Insurance. Dividends come from profit that's already paid Corporation Tax, but carry no National Insurance at all, only dividend tax. Which combination wins depends on how much profit you're extracting and whether your company qualifies for the Employment Allowance.
Quick example: on £100,000 of company profit with no Employment Allowance, a £12,570 salary plus dividends for the rest leaves roughly £65,335 take-home, versus roughly £59,237 for dividends only. With the Employment Allowance available, a salary-only strategy can edge ahead instead, since it avoids Corporation Tax and dividend tax entirely up to the point the allowance runs out.
Want the deeper read? See our guide: Salary vs Dividends: The Most Tax-Efficient Way to Pay Yourself in 2026/27.
Salary vs dividend calculator FAQs
What salary should I pay myself as a director in 2026/27?
Around £12,570, the personal allowance, is a common starting point since no income tax or employee National Insurance is due on it. Whether it's the most tax-efficient figure depends on whether your company qualifies for the Employment Allowance, which this calculator tests directly.
Does my company qualify for the Employment Allowance?
Only if you have at least one other employee earning above the £5,000 secondary threshold. A company with only a director on the payroll, and no other staff, does not qualify, even if the director is the only employee drawing a salary.
Is salary or dividends more tax-efficient?
It depends on your Employment Allowance eligibility. Without it, a low salary plus dividends usually wins, since employer National Insurance bites into salary from £5,000 upward. With the allowance available, salary can outperform dividends up to the point the allowance runs out, since it avoids Corporation Tax and dividend tax entirely.
What's the dividend tax rate for 2026/27?
The first £500 of dividends is tax-free (the dividend allowance). Above that, 10.75% in the basic rate band, 35.75% in the higher rate band, and 39.35% above £125,140, stacked on top of your salary and other income.
Does this calculator account for the State Pension?
No. A £0 salary earns no National Insurance credit towards your State Pension record. Most advisers still suggest a small salary, at least enough for a qualifying year, even where dividends dominate the extraction, regardless of which option shows the highest take-home here.
How accurate is this salary vs dividend calculator?
It assumes a single director-shareholder, one company, no other reliefs, no associated companies, and rUK (not Scottish) tax rates. It compares three fixed strategies for a single tax year, so check more complex ownership structures or multi-year planning with an accountant.
Based on 2026/27 rules. See GOV.UK: Employment Allowance and Corporation Tax rates.