Salary vs dividends calculator 2026/27

Directors can take pay as salary, as dividends, or as both. See what each route costs in tax, National Insurance and corporation tax, and which one leaves you more.

What you keep on this route

£60,487.41

a year, taking £12,570 as salary and the rest as a dividend. That is the better of the two routes here, by £4,160.43.

How the money is charged, in order

Your £90,000 profit pays the £12,570 salary and £1,135.50 of employer National Insurance on it, which leaves £76,294.50. Corporation tax of £16,468.05 is charged on that at 25% after £2,605.58 of marginal relief, so £59,826.45 can be paid as a dividend. You pay £11,909.04 of dividend tax on it, on top of the salary.

What each route leaves you

Route	You keep, a year
Salary of £12,570 plus a dividend	£60,487.41
All salary (£78,913.04)	£56,326.98

What the company pays first

Profit left after the salary and employer National Insurance	£76,294.50
Corporation tax on it, at 25% less marginal relief	£16,468.05
Available to pay as a dividend	£59,826.45
Dividend tax you pay on it	£11,909.04

What this answer assumes

This answers for one ordinary trading company. It assumes the company has no associated companies, is resident in the UK, is not a close investment-holding company, has a full twelve-month accounting period and received no exempt distributions. Each of those changes the corporation tax, and none of them can be worked out from a profit figure. It also assumes the dividend is paid in the same tax year as the salary. The National Insurance on the salary is worked out on the year as a whole, because a company director has an annual earnings period rather than a monthly one (regulation 8(3) of the Social Security (Contributions) Regulations 2001). That holds if you were a director on 6 April. A director appointed later in the year is charged over the weeks that remain, against thresholds scaled to them: on this £12,570 salary with 26 weeks left it would be £502.80 rather than £0.00. It assumes category A — 21 or over, under State Pension age, not an apprentice and not deferring to another job. About you it assumes that the salary and the dividend on this page are all the income you have — other income, such as a second job, a pension, rent or interest, would move the dividend into a higher band — and that your £12,570 Personal Allowance starts whole, with no part of it transferred to a partner and no restricted tax code; where the salary and the dividend together take your adjusted net income above £100,000, this page then takes £1 of it away for every £2 above that. It also assumes the company claims no Employment Allowance against the £1,135.50 of employer National Insurance charged above. HMRC's rule is that a company cannot claim it for a year in which a director is the only employee paid above the secondary threshold, which is the company priced here. A company with another employee paid above that threshold can claim, and up to £10,500 of that employer charge would go.

On a salary of £12,570	A year
Income tax	£0.00
Your National Insurance	£0.00
Employer National Insurance	£1,135.50
You take home	£60,487.41

The salary side

What each salary costs a director over the year

Salary	Income tax	Your NI	Employer NI	You take home
£12,570	£0.00	£0.00	£1,135.50	£12,570.00
£5,000	£0.00	£0.00	£0.00	£5,000.00
£30,000	£3,486.00	£1,394.40	£3,750.00	£25,119.60
£50,000	£7,486.00	£2,994.40	£6,750.00	£39,519.60

Each row prices that salary on its own, with no dividend. The card above prices the route you chose. Where a route pays a dividend as well, the salary and the dividend together decide how much Personal Allowance is left — it tapers away above £100,000 of adjusted net income — so the same salary can bear more tax on the card than it does here.

Dividend rates

What dividends are taxed at

Where the dividend falls	Rate
Basic rate band	10.75%
Higher rate band	35.75%
Additional rate band	39.35%

Why the rates alone are not an answer

The first £500 of dividends is taxed at nothing, and the rates above apply to the rest depending on which band your total income puts it in. That much is published and confirmed. What decides whether a dividend beats a salary is the tax the company paid on the profit before the dividend was declared, and the figures above charge it: corporation tax at the small profits rate, the main rate, or the main rate less marginal relief, whichever the profit left in the company reaches.

Rules v2026.18 · checked against GOV.UK on 18 September 2026Two independent checks on every rate · 393 of 418 hand-verified cases, all passing, beside 43,041 generated · How we calculate · Changelog

Payroll-grade

Questions

Common questions

Which figure does HMRC’s own calculator show?

Usually the same, and in the marginal relief band it can differ by a penny — on about a quarter of the profits that land in it. HMRC works its charge out from the relief before rounding; this page subtracts the relief it shows you, so that the three figures on the page add up. Rounding twice rather than once moves the answer a penny either way, sometimes up and sometimes down, and it is not confined to any particular shape of profit. Where the two routes come out within a penny of each other, that penny can decide which one this page names as better — so if you are choosing between them on a margin that small, treat them as the same. The amount you actually pay is HMRC’s.

What can I rely on here?

All of it, with the assumptions named above. On a salary of £12,570 in England, income tax is £0.00, your own National Insurance is £0.00 and the company pays £1,135.50 of employer National Insurance on top, leaving you £12,570.00. The corporation tax rates, the two limits and the marginal relief fraction are from the official rates table and are confirmed by a second official document; the dividend allowance and rates are too. The corporation tax is worked out twice, by two separately written calculations that are compared against each other on every case we generate.

Does a salary reduce the company’s tax bill?

A salary and the employer National Insurance on it are normally allowable costs of the business, so they reduce the profit that corporation tax is charged on, while a dividend is paid out of profit after that tax. That interaction is the heart of the comparison, and it is what the figures above now work through in order: the salary and its employer National Insurance come out of the profit first, corporation tax is charged on what is left, and the dividend is paid out of what survives that charge and then taxed again in your own hands.

SourcesIncome Tax rates and allowances — GOV.UK Rates and thresholds for employers — GOV.UK