How much you want to take from the company.
Company profits before deducting any salary or dividends.
Employment income, rental income, etc.
Reg. 07380272 · England & Wales · Est. 2010
Want a personalised salary and dividend strategy?
The optimal split depends on your full financial picture. Get advice on the most tax-efficient extraction strategy for your circumstances.
Optimal: £12,570.00 salary + £37,430.00 dividends
You save £6,797.73 per year vs All Dividends
Total Tax
£18,923.52
Effective Rate
37.8%
Net Take-Home
£46,030.02
Everything you need to know about optimising your extraction strategy
Why does the salary/dividend split matter?
As a UK company director, you have the flexibility to choose how much you pay yourself as salary versus dividends. Salary is a deductible expense that reduces Corporation Tax, but it attracts Income Tax, employee NI, and employer NI. Dividends are paid from post-tax profits and are subject to lower dividend tax rates with no NI.
How are dividends taxed differently?
Dividends are taxed at lower rates than salary income: 10.75% (basic), 35.75% (higher), and 39.35% (additional). You also receive a £500.00 annual dividend allowance that is completely tax-free. However, dividends are paid from profits that have already been subject to 19% or 25% Corporation Tax.
The NI advantage of dividends
Dividends do not attract National Insurance contributions. Salary above the NI primary threshold (£12,570.00) incurs 8% employee NI, and the employer pays an additional 15% employer NI above £5,000. By keeping your salary at or below the NI threshold, you can significantly reduce your total tax bill.
What are illegal dividends?
An illegal dividend occurs when a company pays out more in dividends than it has in distributable profits. If you declare a dividend exceeding available profits, directors may be personally liable to repay the excess. Always check your company accounts before declaring dividends.
HMRC-Aligned: Tax calculations use official HMRC rates and thresholds for the 2025/26 tax year (6 April 2025 – 5 April 2026). Results are indicative — for complex situations, consult a qualified accountant.
This calculator uses official rates and thresholds from:
Last verified: February 2026 · Tax year 2025/26. Results are indicative — consult a qualified accountant for personalised advice.
Reviewed by M. Samiuddin Quadri, ACCA — Chartered Certified Accountant at Gladstone & Co. · Updated for the 2025/26 tax year.
Disclaimer: This calculator provides estimates based on current HMRC rates and thresholds for the 2025/26 tax year. It does not constitute professional tax, financial, or legal advice. Your actual liability may differ depending on your individual circumstances. Always consult a qualified accountant or tax adviser before making financial decisions. Read our terms