Salary vs Dividend Calculator
Find the most tax-efficient way to pay yourself from your UK limited company. See exactly how much you'll save with different strategies.
Updated for 2025/26 tax year (including April 2025 NI changes)
Your Company Details
Your company's profit available for extraction
Available if you have other employees (not just directors). Saves up to £10,500 in employer NI.
Recommended Strategy
RecommendedSalary
£12,570
Dividends
£29,399
Salary of £12,570 uses your full personal allowance with minimal NI, while remaining profits are extracted as lower-taxed dividends.
Savings vs All Salary
+£4,146/year
All salary: £35,294
Optimal: £39,440
Strategy Comparison
Explore Custom Salary
Detailed Comparison
| Strategy | Salary | Dividends | Total Tax | Take-Home | Rate |
|---|---|---|---|---|---|
| OptimalBest | £12,570 | £29,399 | £10,560 | £39,440 | 21.1% |
| All Salary | £44,130 | £0 | £14,706 | £35,294 | 29.4% |
| £12,570 Salary | £12,570 | £29,399 | £10,560 | £39,440 | 21.1% |
| No Salary | £0 | £40,500 | £11,900 | £38,100 | 23.8% |
Key 2025/26 Thresholds
Income Tax Rates
Dividend Tax Rates
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Frequently Asked Questions
Everything you need to know about salary vs dividend tax planning
How the Salary vs Dividend Calculator Works
As a UK limited company director, you have significant flexibility in how you extract money from your company. The two main methods are salary (employment income) and dividends (return on investment as a shareholder).
Why the Split Matters
Salary and dividends are taxed very differently. Salary attracts Income Tax and National Insurance (both employee and employer contributions). Dividends only attract Income Tax at special lower rates, with no NI. However, dividends are paid from post-Corporation Tax profits, while salary reduces your company's CT bill.
The Optimal Strategy for Most Directors
For most single-director companies without employees, the optimal strategy is:
- Take a salary equal to the personal allowance (£12,570) - This uses your tax-free allowance, builds state pension entitlement, and only costs minimal employer NI.
- Take remaining profits as dividends - Dividends are taxed at 8.75% (basic rate) vs 20% income tax, with no National Insurance.
April 2025 Changes
The tax landscape changed significantly in April 2025. Employer NI now starts at £5,000 (down from £9,100) and the rate increased from 13.8% to 15%. This makes the decision between salary and dividends even more important, as higher salaries now carry a greater employer NI cost.
Important Considerations
- Employment Allowance - If you have other employees, you may qualify for up to £10,500 reduction in employer NI, making higher salaries more attractive.
- Other Income - If you have employment income, rental income, or other taxable income, this affects which tax bands your company income falls into.
- Pension Contributions - Company pension contributions are a very tax-efficient way to extract money, as they're Corporation Tax deductible and don't attract personal tax at the time.
- Mortgage Applications - Lenders often prefer salary income over dividends, so you may need to balance tax efficiency with mortgage requirements.
Disclaimer
This calculator provides estimates based on standard 2025/26 tax rates and typical scenarios. Your actual situation may vary based on factors like residence status, other income sources, capital gains, or pension contributions. Tax rules change frequently. Always consult a qualified accountant for advice specific to your situation.