Dividend vs Salary Calculator
Find the optimal salary and dividend split for your limited company. Full tax breakdown for 2026/27.
Using 2026/27 figures
Your company
How is dividend tax calculated?
Dividends are paid from post-corporation-tax profits. The dividend allowance for your selected tax year is applied first (see your results). Any further dividends are taxed at the dividend basic, higher and additional rates from this site’s HMRC config for that year, depending on how your salary plus dividends fill the income tax bands.
Dividends do not attract National Insurance, which is the main tax advantage over taking everything as salary.
Why align salary with the employer NI threshold?
Many directors set their salary at the employer National Insurance secondary threshold. At that level, employer and employee NI on the salary are typically zero, while the earnings can still count as a qualifying year for State Pension — subject to other rules.
Because the salary sits below the personal allowance in these examples, no income tax is due on it either. Exact thresholds and rates come from the tax year you select (our config).
Common questions
What is the optimal salary for a limited company director?
For many directors in 2026/27, a salary aligned with the employer NI secondary threshold (£5,000) avoids employer and employee NI while preserving a qualifying year for State Pension. Always confirm with your accountant for your situation.
How much dividend can I take tax-free?
The dividend allowance is £500 for the tax year in our config. Amounts above that are taxed at dividend basic, higher and additional rates depending on where your total income sits in the income tax bands.
Can I take all profits as dividends?
Only from post-tax retained profits. The company pays corporation tax first; dividends come from what is left lawfully available.
What is the dividend allowance?
The allowance is the slice of dividends taxed at 0% for income tax. This site uses the value published in HMRC figures in config for the selected tax year (currently £500 for 2025/26 and 2026/27).
Do I pay NI on dividends?
No — dividends are not subject to National Insurance, which is why salary-plus-dividend is often compared to all-salary extraction.
This calculator provides estimates only and does not constitute tax or financial advice. The optimal salary and dividend strategy depends on your specific circumstances including other income sources, pension contributions and company profits. Always seek advice from a qualified accountant. Rates shown are for 2026/27.
Want an accountant to manage your dividends?
Crunch and Gorilla Accounting both offer fixed-fee packages for limited company directors including dividend advice and payroll.
Compare director accountants →