Unlock Your Full Tax Breakdown
See your complete individual position including take-home pay, dividend tax, and effective tax rate.
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Expected company profit before tax?
Choose your gross salary level
Breakdown
Assumptions
- The expected company profit before tax is BEFORE your chosen salary level
- Assumes that you extract the remaining balance as dividends
- The minimum gross salary has been set at £12,570 (the Primary NIC threshold)
- Assumes no student loans
- Assumes no high income child benefit charge
- Assumes no other income for the individual i.e. rental profits, investment income etc
- Assumes that the employment allowance is already utilised across your team
Common Questions About Salary & Dividends
How did the Autumn Budget 2025 change Dividend Tax?
The Budget announced a 2% increase in Dividend Tax rates, effective from 6 April 2026. The Basic Rate rose to 10.75% and the Higher Rate to 35.75%. The Additional Rate remains frozen at 39.35%.
What is the most tax-efficient director salary for 2026/27?
For most directors, the optimal salary is often set at the Primary Threshold for National Insurance (£12,570). This ensures you qualify for state pension credits without paying Employee NICs. Employer NICs at 15% apply to salary above the £5,000 secondary threshold, unless the company can claim the Employment Allowance. Any income required above this amount is typically taken as dividends, which attract lower tax rates than salary.
Why take dividends instead of a higher salary?
Dividends are generally more tax-efficient because they are not subject to National Insurance Contributions (NICs). While salary is taxed at Income Tax rates plus Employee and Employer NICs, dividends are taxed at lower rates (10.75% for basic rate, 35.75% for higher rate from 6 April 2026) after a £500 tax-free allowance.
Does salary reduce Corporation Tax?
Yes. Your director's salary is a deductible business expense, meaning it reduces your company's profit and therefore its Corporation Tax bill. Dividends, however, are paid out of post-tax profits and do not reduce Corporation Tax liability. This calculator balances these two factors to find your optimal take-home pay.
How accurate is this calculator for personal tax planning?
This tool provides a strategic estimate based on standard UK tax bands and allowances for the 2025/26 and 2026/27 tax year. However, it assumes you have the standard Personal Allowance (£12,570) and no other income sources. For complex situations involving other income, pension contributions, or student loans, we recommend booking a consultation.
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