Dividend vs Salary Calculator
Compare the tax efficiency of extracting profits from your limited company. Calculate net take-home pay, total company costs, and find your optimal withdrawal strategy.
Compare Your Withdrawal Options
Enter the amount you wish to extract from your company and your remaining tax allowances to see the net impact of taking it as 100% Salary versus 100% Dividend.
Extraction & Tax Details
Enter your planned withdrawal and current tax position
Tax Efficiency Evaluation
Comparison of net pay and total company cost
Current UK Tax Rates & Allowances
Key thresholds and rates for the 2024/2025 tax year to help you plan your company extractions.
| Metric | Threshold / Limit | Tax Rate (Basic) | Tax Rate (Higher) |
|---|---|---|---|
| Personal Allowance | £12,570 | 0% | 0% |
| Income Tax | £12,571 – £50,270 | 20% | 40% (above £50,270) |
| Employee NICs | £12,570 – £50,270 | 8% | 8% (above £50,270) |
| Employer NICs | Above £9,100 | 13.8% | |
| Dividend Allowance | £500 | 0% | |
| Dividend Tax | Above £500 allowance | 8.75% | 33.75% (above £50,270) |
Salary vs Dividend FAQ
Everything you need to know about extracting profits from your limited company tax-efficiently.
It depends on your personal tax situation. Dividends are generally more tax-efficient because they are not subject to National Insurance Contributions (NICs). However, a small salary up to the Personal Allowance or Primary NIC Threshold can be highly efficient as it utilises tax-free allowances and counts towards your State Pension qualifying years.
No. Dividends are not subject to Employee or Employer National Insurance Contributions (NICs). This is the primary reason why dividend income is often more tax-efficient than salary income for limited company directors.
For the 2024/2025 tax year, the Dividend Allowance is £500. This means the first £500 of dividend income is tax-free, regardless of your other income. Any dividends above this amount are taxed at your applicable dividend tax rate (8.75%, 33.75%, or 39.35%).
Yes. Director’s salaries and the associated Employer NICs are considered allowable business expenses. This reduces your company’s taxable profit, thereby lowering the overall Corporation Tax bill. Dividends, however, are paid from post-tax profits and do not reduce Corporation Tax.