Salary vs dividend calculator
Enter your company's profit and the salary you want to draw. The calculator pays the rest as dividends after Corporation Tax and shows your total take-home against the alternatives.
Your take-home with this mix
£55,765
Total tax of £24,235 across you and the company, 30.3% of profit.
- Salary
- £12,570
- Employer's National InsurancePaid by the company
- £1,136
- Corporation TaxOn profit after salary and employer's NI
- £13,818
- DividendsAll remaining profit paid out
- £52,476
- Income tax on salary
- £0
- Employee National Insurance
- £0
- Dividend tax
- £9,282
- Take-home pay
- £55,765
Compared with
| Mix | Salary | Dividends | Total tax | Take-home |
|---|---|---|---|---|
| Your choiceHighest | £12,570 | £52,476 | £24,235 | £55,765 |
| Salary of £12,570 | £12,570 | £52,476 | £24,235 | £55,765 |
| All salary, no dividends | £70,217 | £0 | £28,717 | £51,283 |
Figures used, 2026/27
- Employer's NI 15% above £5,000; Employment Allowance £10,500
- Corporation Tax 19% to £50,000, 25% from £250,000, marginal relief between
- Dividend rates 10.75%, 35.75% and 39.35%; allowance £500
- Personal allowance £12,570; employee NI 8% and 2%
- All profit after Corporation Tax is paid out as dividends; no pension contributions or other income
England, Wales and Northern Ireland. Rates reviewed . An estimate, not advice: your own position may differ.
How the calculator works
The calculator starts from your company's profit before any director's pay. It deducts the salary you choose plus employer's National Insurance at 15% on salary above 5,000 pounds, charges Corporation Tax on what remains, and pays everything left over to you as a dividend.
On the personal side it works out income tax and employee National Insurance on the salary, then dividend tax on the dividends sitting on top. Adding the two together gives your take-home pay and the total tax paid across both you and the company.
For most sole directors in 2026/27, a salary equal to the 12,570 pound personal allowance is the usual starting point. It costs no income tax or employee National Insurance, earns a qualifying year for the State Pension, and is a deductible expense for Corporation Tax. Employer's NI of about 1,135 pounds is due on it unless the company can claim the Employment Allowance.
Companies with at least one other employee earning above the secondary threshold can claim the 10,500 pound Employment Allowance, which usually wipes out employer's NI on a modest salary. Sole-director companies with no other staff cannot claim it. Tick the box to see the difference.
The right answer depends on more than this year's tax: pension contributions, student loans, child benefit, the Corporation Tax marginal rate and whether you need to retain profit all matter. Use the figures as a starting point for a conversation rather than a final decision.
Frequently asked questions
For a sole director with no other income, a salary of 12,570 pounds is usually the efficient choice. It uses the personal allowance in full with no income tax or employee National Insurance, and is deductible for Corporation Tax. If the company can claim the Employment Allowance, the same salary carries no employer's NI either.
A salary below the lower earnings limit would not earn a State Pension qualifying year, and salary is deductible against Corporation Tax whereas dividends are not. Taking some salary is normally cheaper overall than dividends alone.
Yes. Profit left after salary and employer's NI is charged at the small profits rate of 19% up to 50,000 pounds, the main rate of 25% above 250,000 pounds, and a marginal rate in between. Dividends are paid from what remains.
Employer pension contributions are not modelled here. They are deductible for Corporation Tax and carry no National Insurance or income tax at the point of payment, so they are often the most efficient way to extract further profit. Ask us if you want them factored in.
No. Dividends can only be paid from accumulated profits after Corporation Tax. Paying a dividend without sufficient reserves is unlawful and the amount can be treated as a loan to the director, with its own tax charges.
Guides on this topic
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