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Salary vs Dividends Calculator

Find the most tax-efficient director salary and dividend split for 2026/27, after Corporation Tax, dividend tax and National Insurance.

Read the Salary vs Dividends guide

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Your company

£

Profit available to pay you, before any salary, dividends or Corporation Tax.

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Your take-home

£38,862

Effective rate 22.3% on company profit, with a £12,570 salary plus £29,399 in dividends.

The tax-efficient split

Director salary£12,570
Employer NI on salary£1,136
Corporation Tax£6,896
Dividends paid£29,399
Income tax + employee NI on salary£0
Dividend tax£3,107
Total tax and NI£11,138

How the split works

  • Salary first: a small director salary is a deductible company cost, so it cuts Corporation Tax. The calculator picks the tax-efficient level for you.
  • Then dividends: what is left after Corporation Tax is paid out as dividends, taxed at 10.75% / 35.75% / 39.35% above the £500 allowance for 2026/27.
  • No NI on dividends: dividends carry no National Insurance, which is why a salary-plus-dividends split usually beats an all-salary one for a company director.

Frequently asked questions

What is the most tax-efficient director salary for 2026/27?
For most single-director companies the tax-efficient salary is around the Personal Allowance, because the salary is a deductible company cost that cuts Corporation Tax while keeping income tax and employee National Insurance low. This calculator picks the optimal level for your profit.
Why pay dividends instead of salary?
Dividends carry no National Insurance, so for a company director a salary-plus-dividends split usually leaves more in your pocket than taking everything as salary. The trade-off is that dividends are paid from post-Corporation-Tax profit and taxed again at the dividend rates.
What are the 2026/27 dividend tax rates?
Above the £500 dividend allowance, dividends are taxed at 10.75% in the basic-rate band, 35.75% in the higher-rate band and 39.35% in the additional-rate band. The Nov 2025 Budget raised the first two by 2 percentage points, which narrowed the salary-vs-dividends advantage.
Is this personal tax advice?
No. This is general information for 2026/27. Your optimal split can depend on other income, pension contributions, the Employment Allowance, and whether you have co-directors. Check with a qualified accountant before setting your remuneration.

Related reading

Salary vs Dividends: the director's split

Why the dividend advantage narrowed for 2026/27.

Corporation Tax UK

The 19%/25% rates and the marginal-relief band.

Limited company vs sole trader

Whether incorporating is worth it for your profit.

Corporation Tax Calculator

Work out the company tax bill before you split it.

Important: Not Financial Advice

This calculator is provided for educational and illustrative purposes only. Freedom Isn't Free is not authorised or regulated by the Financial Conduct Authority (FCA) and does not provide financial advice, investment recommendations, or tax guidance.

The projections shown are hypothetical, assume a constant rate of return, and do not account for inflation, taxes, or fees. Actual investment returns vary and you may get back less than you invest. Past performance is not a reliable indicator of future results.

Before making any financial decisions, please consult with an independent financial adviser regulated by the FCA. For help finding an adviser, visit MoneyHelper or Unbiased.

Where links to financial products appear on this page, some may be affiliate links. See our full disclaimer for details.

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