Salary vs Dividend Calculator
For directors and shareholders of UK limited companies. Find the most tax-efficient mix of salary and dividends using confirmed 2026/27 rates and thresholds.
What you'll get
- Compare salary and dividend strategies side by side
- See your take-home pay and total tax for 2026/27
- Find the most tax-efficient way to pay yourself as a director
If you run your own limited company, how you pay yourself has a direct impact on how much tax you and the company pay. This calculator models income tax, dividend tax, National Insurance and corporation tax to show the most efficient mix of salary and dividends.
Figures use 2026/27 rates and thresholds, including dividend rates of 10.75%, 35.75% and 39.35%. Frozen thresholds do not mean all tax rates and allowances are frozen.
Disclaimer: This calculator provides indicative estimates based on the information you enter and current rules. It is for general guidance only and does not constitute financial, tax or accounting advice. Figures should not be relied upon for decisions — please speak to a Nordens advisor for advice tailored to your circumstances.
Salary or dividends: the short answer
For most UK limited company directors in 2026/27, the most tax-efficient approach is a small salary, often £12,570, topped up with dividends. Salary up to this level is free of Income Tax and employee National Insurance and reduces Corporation Tax, while dividends avoid National Insurance altogether. Dividends are taxed at 10.75%, 35.75% or 39.35% after the £500 dividend allowance.
A worked example for 2026/27
Illustration only. A sole director's company makes £60,000 profit before paying the director. The director lives in England, has no other income and the company cannot claim the Employment Allowance.
| Salary £12,570 + dividends | All salary | |
|---|---|---|
| Gross salary | £12,570 | £52,826 |
| Employer NI | £1,136 | £7,174 |
| Corporation Tax (19%) | £8,796 | £0 |
| Dividends paid | £37,499 | £0 |
| Income Tax and dividend tax | £3,977 | £8,562 |
| Employee NI | £0 | £3,067 |
| Total tax | £13,909 | £18,803 |
| Director's take-home | £46,091 | £41,197 |
What this example shows
On these assumptions, the salary and dividend mix leaves the director around £4,900 better off each year. At higher profits, with other income, or where the Employment Allowance applies, the best mix changes, which is why it is worth running your own figures in the calculator above.
For a fuller comparison that includes employer pension contributions and a worked example for a larger owner-managed company, read our profit extraction guide.
Read the salary, dividends and pension guideFrequently asked questions
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