Free tool, 2026/27
How should I pay myself as a company director?
Enter your company's profit and compare a low salary with dividends against taking it all as salary, with corporation tax, National Insurance, income tax and dividend tax all worked through.
Profit for the year after all other costs, but before any salary or dividends to you.
Salary at £5,000
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No employer's NI at all. Below the level that earns a qualifying year for the state pension.
Salary at £12,570
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Uses the full personal allowance and earns a qualifying year for the state pension. The company pays employer's NI on the excess above the secondary threshold.
All profit as salary
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No dividends. Included as a comparison, rarely the efficient answer for a director.
Assumes you are the sole director and only employee, take no other income, and distribute all remaining post-tax profit as dividends. Employment Allowance is not applied, because a company whose only employee paid above the secondary threshold is a single director cannot claim it. Your £12,570 personal allowance falls by £1 for every £2 of salary and dividends over £100,000, and is gone by £125,140. Each option allows for this. An estimate, not advice.
Talk it throughHow it works
What this does, and what it assumes.
For each approach the calculator takes the salary, adds the employer's National Insurance on it, deducts both from profit, charges corporation tax on what is left, and treats the rest as dividends. It then works out your income tax, National Insurance and dividend tax.
It assumes you are the only director and the only employee, with no other income, and that all remaining profit is paid out as dividends. Employment Allowance is not applied, because a company whose only employee paid above the secondary threshold is a single director cannot claim it.
Real decisions also weigh pension contributions, leaving profit in the company, your state pension record and what else you earn. The calculator shows the shape of the answer; your own figures settle it.
Rates for 2026/27, last checked against GOV.UK on 30 September 2026. See every rate. Reviewed by Lewis Wright, AAT licensed accountant.
Questions
Asked and answered.
Why do so many directors take a small salary?
A salary at the right level can use your personal allowance, count towards your state pension and reduce the company's corporation tax, while keeping employer's National Insurance low or nil. Profit above that is often more efficiently taken as dividends.
Did dividend tax change in April 2026?
Yes. The ordinary and upper rates rose by two percentage points, to 10.75% and 35.75%. The calculator uses the 2026/27 rates.
Tax rates 2026/27Want a straight answer for your own figures?
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