Director Salary vs Dividend Calculator
Instantly compare take-home pay and total tax cost for salary, dividends, or an optimal mix as a UK company director. Based on 2025/26 tax rates and thresholds.
Compare Your Extraction Method
Enter the annual amount you want to extract from your company and choose a method below to see an instant, illustrative breakdown of take-home pay and total tax cost.
Salary vs Dividend Calculator
Enter your figures to see your estimated take-home pay
The total value you want to take out of the company this tax year
Applies to profits between £50,000 and £250,000; use 19% below £50,000
Compare how the same amount is taxed under each approach
Estimated Take-Home
Illustrative figures based on 2025/26 UK tax rates
UK Tax & NI Reference Chart
Key rates and thresholds for the 2025/26 tax year used in this calculator. Use this to verify your results or adjust the estimator above.
| Threshold / Rate | Value | Applies To | Notes |
|---|---|---|---|
| Personal Allowance | £12,570 | Income Tax | Tax-free earnings threshold |
| Basic Rate Band | 20% up to £50,270 | Salary / Other Income | Above Personal Allowance |
| Higher Rate Band | 40% up to £125,140 | Salary / Other Income | Above £50,270 |
| Employee NI (Primary) | 8% / 2% | Salary | 8% up to £50,270, 2% above |
| Employer NI (Secondary) | 15% | Salary | Above £5,000 secondary threshold |
| Dividend Allowance | £500 | Dividends | Tax-free dividend income |
| Dividend Tax Rates | 8.75% / 33.75% / 39.35% | Dividends | Basic / Higher / Additional rate |
| Corporation Tax | 19% – 25% | Company Profits | 19% under £50k, 25% over £250k, marginal relief between |
Salary vs Dividend FAQ
Everything you need to know about extracting money from your company as tax efficiently as possible.
For most owner-directors, a small salary up to the personal allowance combined with dividends for the remainder is the most tax efficient approach. This uses up the tax-free personal allowance without triggering employee National Insurance, while dividends are taxed at lower rates than salary above that point.
Many directors set their salary at the personal allowance of £12,570 per year, since this uses the full tax-free allowance and avoids employee National Insurance. Some choose the lower secondary NI threshold of £5,000 instead to reduce employer National Insurance, depending on whether Employment Allowance can be claimed.
No. Unlike salary, dividends are paid from post-tax company profits and are not a deductible business expense, so they do not reduce the company’s Corporation Tax bill. Salary and employer National Insurance contributions, by contrast, are deductible expenses.
The tax-free dividend allowance for the 2025/26 tax year is £500. Dividend income above this allowance is taxed at 8.75% within the basic rate band, 33.75% within the higher rate band, and 39.35% within the additional rate band.