# Salary vs Dividend Calculator

> Compare director salary levels and dividends for a UK limited company. See corporation tax, National Insurance, dividend tax and take-home pay side by side.

Enter your company's profit and compare what you take home at different salary levels, with the rest paid as a dividend.

Use the calculator: https://www.taxoptimiser.co.uk/calculators/salary-vs-dividend

Example: On a company profit of £60,000 for 2026-27, a salary of £12,570 with a dividend of £37,498.00 leaves the most of the standard salary levels: £46,090.72 take-home after £13,908.64 of tax in total.

## Why directors mix salary and dividends

A salary is deducted from the company's profit before corporation tax, but above the thresholds it carries employee's and employer's National Insurance. Dividends carry no National Insurance and are taxed at lower rates, but they are paid out of profit that has already borne corporation tax. The best mix depends on how those two effects balance at your level of profit.

## What the calculator assumes

One director who owns all the shares and has no other income, a company year that matches the tax year, and all profit after corporation tax paid out as a dividend. The Employment Allowance is only available where the company has another employee paid above the secondary threshold, so a sole director normally cannot claim it.

## State pension

A salary at or above the lower earnings limit counts as a qualifying year for the state pension, even though no employee's National Insurance is payable until the primary threshold.

## Best of the standard salary levels by profit, 2026-27

The calculator compares no salary, the National Insurance secondary threshold, the lower earnings limit, the Personal Allowance and taking everything as salary. One director who owns all the shares, no other income, no Employment Allowance, and all profit after corporation tax paid as a dividend.

| Company profit | Salary | Dividend | Total tax | Take-home |
| --- | --- | --- | --- | --- |
| £30,000 | £12,570 | £13,198.00 | £5,596.39 | £24,402.97 |
| £50,000 | £12,570 | £29,398.00 | £11,137.89 | £38,861.47 |
| £75,000 | £12,570 | £48,801.00 | £21,596.01 | £53,403.40 |
| £100,000 | £12,570 | £67,176.00 | £34,790.08 | £65,209.33 |
| £150,000 | £5,000 | £110,325.00 | £64,678.83 | £85,321.17 |

## Director's National Insurance thresholds, 2026-27

Annual figures.

| Threshold or rate | Amount |
| --- | --- |
| Lower earnings limit (qualifying year for state pension) | £6,708 |
| Secondary threshold (employer's National Insurance starts) | £5,000 |
| Primary threshold (employee's National Insurance starts) | £12,570 |
| Employee's rate above the primary threshold | 8% |
| Employer's rate above the secondary threshold | 15% |
| Employment Allowance | £10,500 |

## Dividend tax rates

Dividends covered by unused Personal Allowance, and then by the dividend allowance, are taxed at 0%.

| Tax year | Dividend allowance | Basic rate band | Higher rate band | Additional rate band |
| --- | --- | --- | --- | --- |
| 2026-27 | £500 | 10.75% | 35.75% | 39.35% |
| 2025-26 | £500 | 8.75% | 33.75% | 39.35% |

## Frequently asked questions

### What is the most tax-efficient director's salary for 2026-27?

On a company profit of £50,000 with no Employment Allowance, a salary of £12,570 with the rest paid as a dividend of £29,398.00 leaves the most of the standard salary levels: £38,861.47 take-home after £11,137.89 of tax in total. The answer changes with the profit and with the Employment Allowance.

### What salary keeps my state pension record?

A salary at or above the lower earnings limit, £6,708 for 2026-27, counts as a qualifying year even though no employee's National Insurance is due until £12,570.

### Is it better to take salary or dividends from my company?

Usually a mix. A small salary uses your Personal Allowance and is deducted before corporation tax, and dividends on top carry no National Insurance. The calculator compares the standard salary levels for your profit and shows which leaves the most take-home pay.

### Do dividends carry National Insurance?

No. Dividends are not earnings, so neither the company nor the director pays National Insurance on them. They are paid out of profit that has already borne corporation tax.

### Can a sole director claim the Employment Allowance?

Normally not. The allowance is only available where the company has another employee paid above the secondary threshold.

## Related calculators

- [Dividend Tax Calculator](https://www.taxoptimiser.co.uk/calculators/dividend-tax.md): Income tax on dividends on top of your salary, band by band.
- [Corporation Tax Calculator](https://www.taxoptimiser.co.uk/calculators/corporation-tax.md): Estimate Corporation Tax for a UK limited company with marginal relief.
- [Sole Trader vs Limited Company Calculator](https://www.taxoptimiser.co.uk/calculators/sole-trader-vs-limited-company.md): Compare tax and take-home on the same profit as a sole trader and as a company.
- [Take-Home Pay Calculator](https://www.taxoptimiser.co.uk/calculators/take-home-pay.md): What is left of your salary after tax, National Insurance, pension and student loans.

## Sources

- [Rates and thresholds for employers 2026 to 2027](https://www.gov.uk/guidance/rates-and-thresholds-for-employers-2026-to-2027) (GOV.UK)
- [Tax on dividends](https://www.gov.uk/tax-on-dividends) (GOV.UK)
- [Income Tax rates and Personal Allowances](https://www.gov.uk/income-tax-rates) (GOV.UK)
- [Corporation Tax rates and allowances](https://www.gov.uk/corporation-tax-rates) (GOV.UK)

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Last updated 11 October 2026. Guidance only: a general estimate, not tax advice. Published by Tax Optimiser, UK tax filing software (https://www.taxoptimiser.co.uk).