Kompanies

Calculator · 2026/27

Salary vs dividend calculator

Compare taking money out of your limited company as salary or as dividends: corporation tax, income tax, NI and the dividend allowance.

How this is calculated

This calculator uses HMRC published rates for the 2026/27 tax year. Salary is deductible for Corporation Tax. Employer National Insurance is charged at 15% on salary above £5,000 (the Employment Allowance is ignored because a company whose only employee is a director cannot usually claim it). What is left is taxed at the small-profits rate of 19% on profits up to £50,000, with marginal relief up to £250,000 and 25% above that, and the rest is paid out as a dividend.

Dividends get a £500 allowance, then are taxed at 8.75% in the basic-rate band, 33.75% in the higher-rate band and 39.35% above it, after the salary has used up the personal allowance and bands. It models a one-person company with no other income, so treat the answer as a starting point.

Worked example

A company makes £60,000 profit before paying its director. With a salary of £12,570, employer National Insurance is £1,136 and Corporation Tax on the remaining £46,295 is £8,796, leaving a dividend of £37,499. Dividend tax on that is £3,237, so the director keeps about £46,831 in total.

Common questions

Why take a salary at all?

A salary is deductible for Corporation Tax and, at the right level, builds National Insurance credits towards the State Pension. Many directors combine a modest salary with dividends.

Can a company pay dividends without profits?

No. Dividends can only be paid out of profits that remain after tax. Paying them without enough profit is unlawful and the money may have to be repaid.

Does it include the Employment Allowance?

No. A company whose only employee is a director cannot usually claim it, so the calculator leaves it out.

Other calculators

Figures for the 2026/27 tax year as published at the time of writing; always check gov.uk before acting. Not tax advice.