Salary vs dividend calculator 2026/27
- Enter your company profit, see the best split
- Factors in Corporation Tax, NI, Income Tax and dividend tax
- Shows total tax and your take-home at each option
- Updated for the April 2026 dividend rate rise
- No sign-up required
Find your best salary and dividend split
Enter the profit your company makes before your own salary. The tool tests every salary level and shows the one that leaves you with the most after all taxes. Nothing is stored or sent anywhere.
Illustration for 2026/27 based on standard assumptions: England, Wales or Northern Ireland; the director is the only employee; no other personal income; no student loan. Dividend rates 10.75% / 35.75% / 39.35%, dividend allowance £500, personal allowance £12,570 (tapered above £100,000). Corporation Tax 19% up to £50,000, marginal relief (26.5% effective) to £250,000, then 25%. Employer NI 15% above £5,000, employee NI 8% then 2%. Not financial or legal advice. Sources: HMRC dividend tax, Corporation Tax rates.
How the split affects what you keep
Every pound your company earns can leave in one of two ways, and they're taxed on completely different paths. Salary comes out before Corporation Tax, so it lowers your company's tax bill, but it triggers employer National Insurance at 15% above £5,000, plus employee NI and Income Tax once you go past the personal allowance. Dividends come out of profit that has already been through Corporation Tax at 19% to 25%, and then you pay dividend tax of 10.75%, 35.75% or 39.35% on top.
The calculator above runs the full sum at every salary level from zero upwards and reports the one that leaves the most in your pocket. For most directors that lands on a salary of £12,570 with dividends for the rest, but not always, and the reason is worth understanding.
Why £12,570 salary usually wins
A £12,570 salary uses your whole personal allowance, so you pay no Income Tax on it. It sits at the National Insurance primary threshold, so there's no employee NI. Your company pays a little employer NI (£1,136) but claims the salary and that NI as a deductible expense, cutting Corporation Tax. And importantly, that salary level still counts as a qualifying year towards your state pension. You need 35 qualifying years for the full new state pension, which is £12,548 a year in 2026/27, so protecting the year matters over a career.
Above £12,570, extra salary starts attracting 20% Income Tax plus 8% employee NI plus 15% employer NI. That combined drag is heavier than routing the same money through Corporation Tax and dividend tax, at most profit levels.
When a higher salary now wins
Here's the part that changed in April 2026. The dividend ordinary rate went up from 8.75% to 10.75%, and the upper rate from 33.75% to 35.75%. That rise made dividends a bit less generous, and at lower company profits it can tip the balance towards taking more as salary.
Take a company making £50,000 profit. Route it through the dividend structure and you pay Corporation Tax first, then dividend tax on what's left. Take it all as salary instead and it's taxed once, at 20% Income Tax and 8% employee NI, and the salary wipes out the company's Corporation Tax entirely. On the current numbers, all-salary can leave a director on £50,000 profit with a little more than the low-salary route. The gap is small, a few hundred pounds, so it's rarely worth giving up the flexibility of dividends for it. But the fact it's now close at all is a direct result of the 2026 rate rise, and any calculator still using the old 8.75% figure will tell you the wrong thing.
The take-home curve is flat near the top
One thing the tool makes clear: around the best salary level, the take-home barely moves. Shifting your salary by a few thousand pounds either side of the optimum changes your net by tens of pounds, not thousands. So don't agonise over hitting an exact figure. Pick a round, sensible salary (£12,570 is the standard), and spend your energy on the decisions that actually move the needle: employer pension contributions, timing dividends across tax years, and staying under the £100,000 personal allowance cliff.
The employer pension lever
If you entered an employer pension contribution above, you'll have seen it change the numbers. A company pension contribution is deductible for Corporation Tax, carries no National Insurance, and isn't taxed as your personal income when it goes in. For a higher-rate director it's often the most efficient way to take money out of the company, beating both salary and dividends. The trade-off is access: the money is locked away until at least age 55 (rising to 57 from 2028). Read more in our guide on the optimal split for 2026/27.
What this tool assumes
To keep the answer clear, the calculator makes standard assumptions. It treats you as the sole director-employee with no other income, uses the England, Wales and Northern Ireland Income Tax bands (Scottish rates differ), ignores student loan repayments, and assumes you take all available post-tax profit as dividends unless salary is more efficient. It also assumes your company actually has the distributable reserves to pay the dividends, which is a legal requirement. Your real position may differ, so treat the output as a well-grounded starting point rather than a final answer.
A worked example: £80,000 profit
Say your company makes £80,000 before your salary. Take £12,570 as salary. The company pays £1,136 employer NI, leaving £66,294 of taxable profit. Corporation Tax comes to £13,818 (19% on the first £50,000, then the 26.5% marginal rate on the rest). That leaves £52,476 to pay out as dividends.
On those dividends you pay £9,282 in dividend tax (the first £500 is free, £37,200 at 10.75%, and the remainder at 35.75%). Your take-home is £55,765, and the total tax across the whole structure is £24,235. Taking the full £80,000 as salary instead would cost more once employer NI, employee NI and 40% Income Tax are added, which is why the low-salary route still wins at this level.
Salary vs dividend questions
For most directors, £12,570 salary plus dividends leaves you with the most after tax. It uses the full personal allowance, keeps a state pension year, and is deductible for Corporation Tax. At lower profits (roughly under £50,000) a higher salary can now win, because the April 2026 dividend rate rise made dividends slightly less generous. Enter your own profit above to see your split.
Salary is paid before Corporation Tax and reduces the company's taxable profit, but carries employer NI (15% above £5,000), plus Income Tax and employee NI above the personal allowance. Dividends are paid from profit after Corporation Tax and taxed personally at 10.75%, 35.75% or 39.35%. The tool totals all of these at each salary level and finds the one that leaves you with the most.
It narrowed the gap. The ordinary rate rose from 8.75% to 10.75% and the upper rate from 33.75% to 35.75%. Low salary plus dividends still beats all salary at most profit levels because it avoids National Insurance, but the saving is smaller than before, and at lower profits a higher salary can now leave you better off.
At lower profits, keeping income inside the 20% band as salary can beat routing it through Corporation Tax and then dividend tax. The take-home curve is flat near the best point, so a few hundred pounds either way isn't worth chasing at the expense of state pension years or mortgage plans.
No. It gives a sound illustration on 2026/27 rates and standard assumptions. Pension contributions, IR35, mortgage plans and retained profits all change the answer. Use it as a starting point and confirm your plan with a qualified accountant.