Self-Employed
Salary vs Dividends: The Director's Split for 2026/27
Most one-person companies pay a small salary up to the GBP 12,570 Personal Allowance, then take the rest as dividends. Salary is deductible against Corporation Tax; dividends are paid from post-tax profit but carry no National Insurance. After the Nov 2025 Budget raised dividend rates, the dividend advantage has narrowed but usually still wins.
1
Personal Allowance - GBP 12,570 - the usual salary level for a director
2
Dividend allowance - GBP 500 tax-free, on top of the Personal Allowance
3
Dividend rate (basic band) - 10.75% (up from 8.75% before the Nov 2025 Budget)
4
Dividend rate (higher band) - 35.75% (up from 33.75%)
5
Plus 6 more in the full guide
Freedom Isn’t Free Scan to read
freedomisntfree.co.uk/guides/salary-vs-dividends-uk