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
Paid by the company into your pension out of pre-tax profit. Leave at £0 if there isn't one. The most this profit and salary can fund is £86,294.
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
- Any employer pension contribution is paid by the company in this tax year and meets the “wholly and exclusively” test, so it is deducted for corporation tax in the period it is paid. It carries no National Insurance and is not taxable income for you
- The employer pension contribution cannot be more than the profit left after salary and employer's NIC
- The annual allowance check takes your salary plus dividends as threshold income, and adds the employer pension contribution for adjusted income. It ignores any other income and any other pension contributions
- Unused annual allowance from the previous three tax years may be carried forward; this is not modelled, and no annual allowance tax charge is calculated
Common Questions About Salary & Dividends
How did the Autumn Budget 2025 change Dividend Tax?
The Budget of November 2025 announced a 2 percentage point 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 get a qualifying year for the State Pension 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. With no other income, £12,570 gives the highest take-home in 2026/27 up to about £188,000 of company profit; above that, a higher salary can do slightly better.
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, following the November 2025 Budget) 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 shows how both affect your take-home pay for the salary you enter.
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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