Crestline.
Free tool · 2026/27 rates

Salary vs Dividend Calculator

See exactly how much more you could take home as a director-shareholder by combining a salary with dividends.

£60,000
£0£500,000

Tax year 2026/27 rates. For a one-director limited company. Estimates only — not financial advice.

A limited company structure could save you£4,895 / yr
Option A — recommended
Salary + Dividends
23.2% effective tax
Director salary£12,570
Employer NI− £1,136
Taxable company profit£46,295
Corporation tax− £8,796
Dividends available£37,499
Income tax on salary− £0
Employee NI− £0
Dividend tax− £3,977
Take-home£46,091
Option B
All as Salary
31.3% effective tax
Gross salary£52,826
Employer NI− £7,174
Income tax− £8,562
Employee NI− £3,067
Take-home£41,197
Potential saving£4,895by using Option A
Option A effective rate23.2%including corp tax
Option B effective rate31.3%all-salary route
Tax year2026/27UK rates apply

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Disclaimer: These are estimates based on 2026/27 UK tax rates for a single-director limited company with no other income. They do not constitute financial or tax advice. Your circumstances may differ — pension contributions, other income sources, IR35 status, and company expenses all affect the outcome. Speak to a qualified accountant before making decisions. Crestline Accountants Ltd accepts no liability for decisions made on the basis of these estimates.

Frequently asked questions

Why is salary + dividends more tax-efficient?

Dividends are taxed at lower rates than income and are not subject to National Insurance contributions. By setting the director's salary at the personal allowance level, you also eliminate PAYE and employee NI on salary while keeping a State Pension year.

What salary should a director take in 2026/27?

Most one-director companies pay £12,570 — matching the personal allowance — to avoid income tax and employee NI on the salary. Note that employer NI now starts at £5,000, so there is a small employer NI cost; the overall package is still significantly more efficient than all-salary.

Does this work if I'm caught by IR35?

No. If HMRC determines your contract falls inside IR35, dividend extraction is disallowed and you are taxed as an employee. The all-salary column gives you the right comparison in that scenario.

Are these figures exact?

They are accurate estimates for a single-director limited company with no other income and no pension contributions. Real-world figures vary with business expenses, pension, other income, and company structure. Speak to us for tailored advice.

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