Tools · Directors
Dividend vs Salary Calculator
If you run a limited company, should you take profit as salary or as dividends? See exactly what reaches your pocket each way, after corporation tax, employer National Insurance, income tax and dividend tax.
2026/27 tax year · England, Wales & Northern Ireland
Why the answer changes
Dividends are paid out of profit that has already suffered corporation tax, but they escape National Insurance. They are not taxed at source either, so you declare them on a Self Assessment return and pay the tax later, which the Self Assessment calculator works out including the payment on account. Salary avoids corporation tax (it's a deductible cost) but attracts employer National Insurance at 15% plus your own income tax and National Insurance. The rise in employer NI and the higher 25% corporation-tax rate have narrowed what used to be a clear dividend win, so the sensible split now depends on your numbers.
A common approach is a modest salary plus dividends, and the optimal salary and dividend split calculator sweeps every salary level to find the exact one that leaves you most. If your income is near £100,000, also see the 60% tax trap calculator and the High-Earner Tax Optimiser, and for the pension angle, ISA vs pension.
Frequently asked questions
Should a director take salary or dividends?
It depends on your corporation-tax rate and income band. At 19% corporation tax, dividends usually win. At 25% and higher-rate, the employer-NI rise has narrowed the gap and salary can be close or better. This tool shows your numbers.
What does this calculator assume?
It compares the same pre-tax profit taken as extra salary (15% employer NI, corporation-tax relief) or as a dividend (after corporation tax, then dividend tax). It includes the £500 dividend allowance once and assumes your salary is already above the £5,000 NI secondary threshold. It does not model the £100,000 personal-allowance taper.
Can I claim the Employment Allowance?
Usually not if you are the only employee and director. If eligible, it covers up to £10,500 of employer NI and improves the salary route. Set the option accordingly.
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