Running a company
Salary vs dividend calculator
Compare any split between salary and dividend and see what reaches you after employer and employee National Insurance, corporation tax, income tax and dividend tax. Uses the 2026/27 figures, which moved at the last Budget.
Take-home maximising split: salary £12,570, dividend £67,176. You keep £65,210.
Split with the highest take-home
On £100,000 of profit
- Salary
- £12,570
- Dividend
- £67,176
- Employer National Insurance
- −£1,136
- Paid by the company on your salary. The Employment Allowance would cover this, and a sole director cannot claim it.
- Corporation tax
- −£19,118
- Income tax on salary
- £0
- Your National Insurance
- £0
- Dividend tax
- −£14,537
You keep
£65,210
65% of the profit reaches you. The other £34,790 is tax, company and personal together.
- You keep65%£65,210
- Corporation tax19%£19,118
- Dividend tax15%£14,537
- Employer NI1%£1,136
- Income tax0%£0
- Employee NI0%£0
Against taking it all as dividend
Taking £77,250 entirely as dividend leaves £63,606 in your pocket. The salary and dividend mix above leaves £1,604 more, because salary comes off profit before corporation tax and dividend does not.
Information only. Pension, other income and cash the company must keep change whether this split fits. This page does not know any of that.
Why this gives a different answer
Most salary-versus-dividend guides recommend a salary at the personal allowance on the basis that the Employment Allowance wipes out the employer National Insurance. A company whose only employee is a single director cannot claim that allowance, and that is the most common company among the people reading this. Leave the box unticked and the sum changes.
The second difference is corporation tax. Between £50,000 and £250,000 of profit, marginal relief makes the effective rate climb to 26.5 per cent, higher than the 25 per cent headline, and that band is where a great many of these companies sit. Approximating it with a flat rate gets the comparison wrong in the exact place it matters.
The third is that dividends stack on top of salary, so the band a dividend falls into depends on the salary underneath it. The two cannot be chosen separately, so this searches the whole range instead of applying a rule of thumb.
The figures underneath
The rates below are the same ones used in the rates hub. Each entry notes where we read it and when it is due another check.
- Corporation tax on company profits.
- 19% up to £50,000, 25% above £250,000, with marginal relief in between
- Both thresholds are divided by the number of associated companies, so a second company can raise the rate on the first.
- GOV.UK, Corporation Tax rates, read 2026-09-14 · next checked 2027-03-01
- Employer National Insurance and the threshold it starts at.
- 15% on earnings above a secondary threshold of £5,000 a year
- A director paying themselves a salary pays this on top of income tax and employee NI.
- GOV.UK, Rates and thresholds for employers, read 2026-09-14 · next checked 2027-03-01
- Class 1 National Insurance deducted from an employee's pay.
- Category A: 8% on earnings between £12,570 and £50,270, then 2% above
- A director's National Insurance is worked out over the whole tax year rather than pay period by pay period, which is why a director's salary can be planned against the annual thresholds.
- GOV.UK, rates and thresholds for employers 2026 to 2027, read 2026-09-15 · next checked 2027-03-01
- The reduction in an employer's annual National Insurance bill.
- £10,500
- Not available to a company whose only employee is a single director.
- GOV.UK, Rates and thresholds for employers, read 2026-09-14 · next checked 2027-03-01
- Income tax rates and bands in England, Wales and Northern Ireland.
- Nil to £12,570, 20% to £50,270, 40% to £125,140, then 45%
- Scotland sets its own bands and rates.
- GOV.UK, Income Tax rates and Personal Allowances, read 2026-09-14 · next checked 2027-03-01
- Dividend income you can receive before tax.
- £500
- GOV.UK, Tax on dividends, read 2026-09-14 · next checked 2027-03-01
- Tax rates on dividends above the allowance.
- Basic 10.75%, higher 35.75%, additional 39.35%
- The basic and higher rates rose for 2026 to 2027. Any salary-versus-dividend sum built on the old numbers is out of date.
- GOV.UK, Tax on dividends, read 2026-09-14 · next checked 2027-03-01
- How the personal allowance is withdrawn above £100,000.
- £12,570, reduced by £1 for every £2 of adjusted net income above £100,000, and nil at £125,140
- Produces an effective 60% marginal rate on income between £100,000 and £125,140 in England, Wales and Northern Ireland. Scottish rates differ.
- GOV.UK, Income Tax rates and Personal Allowances, read 2026-09-14 · next checked 2027-03-01
Questions
What directors ask about this
Why does your answer differ from every other salary and dividend calculator?
Most of them assume you can claim the Employment Allowance, which is £10,500 off your employer National Insurance bill. On that assumption a salary at the personal allowance can look NI-free to the company, which is what many tools optimise for.
not available to a company whose only employee is a single director. If you are your company's only employee and its only director, that describes a large share of people using this page. You cannot claim the allowance, employer NI on salary is real, and the box here defaults to unticked.
Should I just take everything as dividends?
A salary is a company expense, so it reduces profit before corporation tax. A dividend is paid from profit after corporation tax (19% up to £50,000, 25% above £250,000, with marginal relief in between).
A pound of salary is relieved once and taxed once in your hands. A pound of dividend can be taxed at the company and again when you receive it. Taking no salary also means no qualifying year for the State Pension. This calculator does not put a price on that missing year; it keeps running with the figures it has.
What is marginal relief, and why does it matter here?
Corporation tax is 19% up to £50,000, 25% above £250,000, with marginal relief in between. Between the two thresholds the relief tapers away as profit rises, which means every extra pound of profit in that band is taxed at about 26.5 per cent, higher than the 25 per cent headline rate.
A calculator that applies a flat corporation tax rate through that band misstates the salary-versus-dividend trade-off for many small companies. This one models marginal relief.
Both thresholds are divided by the number of associated companies, so a second company can raise the rate on the first.
Does this account for my pension, student loan or Scottish rates?
No, and we list the omissions openly. Pension contributions, student loans, Scottish income tax, benefits in kind, other income and associated companies are all outside the model.
Each of those needs extra questions, and any of them can change the split. Pension contributions in particular interact with the £100,000 threshold. We stop where the inputs end and say so.
Can I rely on this?
Treat it as arithmetic you can check. Rates on this page link to the gov.uk pages they were read from, with dates, if you want to verify a line.
It still cannot see your whole position. Before changing how you pay yourself, an accountant who knows your company is the sensible next step. Their fee is small next to a year of getting the split wrong.
The Swealth letter
One letter a week, on Thursday
Plain writing about British money, including the thresholds that move without anyone announcing them.