As a company director you can pay yourself a salary, dividends, or a mix. Enter your profit and the recommended optimal salary, and see your total take-home after Corporation Tax, NI and dividend tax.
Profit · salary · 2026/27
Company directors usually pay themselves a low salary plus dividends. The salary (up to the £12,570 Personal Allowance) is tax-free for you and deductible against Corporation Tax for the company. Dividends are then paid from post-Corporation-Tax profit, taxed at the lower dividend rates and free of National Insurance. Getting the split right can save thousands a year.
| Element | 2026/27 |
|---|---|
| Optimal salary (typical) | £12,570 |
| Corporation Tax (small profits) | 19% |
| Dividend allowance | £500 |
| Dividend rates | 8.75% / 33.75% / 39.35% |
Paying a £12,570 salary triggers a little employer's National Insurance above the £5,000 secondary threshold, but the salary is fully deductible against Corporation Tax — so the company saves 19% (or 25%) on that £12,570. The CT saving comfortably beats the employer NI, making £12,570 the sweet spot for most single-director companies. Below £6,500 your salary is too low to protect your State Pension record.
Once your total income passes £50,270, dividends are taxed at 33.75% — so taking everything in one year can be costly. Spreading dividends across tax years, or paying a pension contribution, can help. Model the full director picture with the dividend vs salary calculator and the contractor take-home calculator.
For most single-director companies it's £12,570 — tax-free for you, deductible against Corporation Tax, and the small employer NI is outweighed by the CT saving.
A mix wins: a low £12,570 salary (tax-free, CT-deductible) plus dividends for the rest, which avoid NI and are taxed at lower rates.
Up to £50,270 of total income, dividends are taxed at just 8.75%; above that the rate jumps to 33.75%, so many directors keep income near £50,270.
No — dividends carry no National Insurance for you or the company, which is a key reason directors favour them over extra salary.
