Find the salary and dividend mix that leaves you the most from your company's profit in 2026/27, with Corporation Tax, National Insurance and dividend tax worked out. No sign-up.
A salary is a business cost: the company deducts it, and the employer National Insurance on it, before working out Corporation Tax. You pay Income Tax and employee National Insurance on it, but none on the first £12,570. The company pays employer National Insurance at 15% on salary above £5,000 unless it can claim Employment Allowance.
A dividend comes out of profit after Corporation Tax. There's no National Insurance on it, and dividend tax rates are lower than Income Tax rates, but the company has already paid 19% to 25% Corporation Tax on that profit.
So each pound of salary saves Corporation Tax and may cost National Insurance; each pound of dividend avoids National Insurance but has been taxed in the company first. Where the balance falls depends on your profit, your other income and whether the company can claim Employment Allowance. The calculator tries £0, £5,000, £6,708, £12,570, every £500 up to £50,270, and the most your profit can pay as salary, then shows the one that leaves you the most. A tie goes to the lower salary.
A salary at or above the Lower Earnings Limit (£6,708 for 2026/27) gives you a qualifying year for the State Pension. Between £6,708 and £12,570 you pay no employee National Insurance but the year still counts, so a salary in that range protects your record at no personal cost. Dividends don't count. Check your record on GOV.UK.
Ledgers keeps your company's books and works out the payroll figures for your salary. From the Starter plan (£29 a month ex VAT) it also prepares the year-end and the Corporation Tax computation. It doesn't file RTI submissions, the CT600 or your accounts: you or your accountant file those. See plans or start free and run your director's pay from up-to-date books.
For a one-director company with no Employment Allowance, a salary of £12,570 usually leaves the most, even with 15% employer National Insurance on the part above £5,000, because the salary and that NIC both come off the company's profit before Corporation Tax. It isn't always the answer: at some profit levels a lower or higher salary wins by a small amount, which is why the calculator tries every £500 step.
A salary up to £12,570 uses your personal allowance with no Income Tax or employee National Insurance, and it's deducted from the company's profit before Corporation Tax. Dividends aren't. A salary of at least £6,708 also keeps your year counting towards the State Pension.
It's £6,708 a year for 2026/27 (£129 a week). Pay at or above it gives you a qualifying year for the State Pension, and you pay no employee National Insurance until your salary passes £12,570.
No. A company can't claim it if a director is the only employee paid above the secondary threshold (£5,000 a year). With another employee, or a second director, paid above it, the company can take up to £10,500 a year off its employer National Insurance.
The first £500 is tax-free, then 10.75% in the basic rate band, 35.75% in the higher rate band and 39.35% above that. Dividends are taxed as the top slice of your income, after salary and other income, and the £500 allowance still uses up band space.
Only out of profits available for distribution, after Corporation Tax, and with the right paperwork: a board decision and a dividend voucher. Money you take any other way goes through your director's loan account, which has its own tax rules.
Learn more: How to pay dividends · Director's loan accounts · Sole trader vs limited company in 2026 · Corporation Tax calculator · Sole trader vs limited company calculator
Estimate, not tax advice. Based on GOV.UK rates for 2026/27, checked October 2026. Income Tax figures are for England, Wales and Northern Ireland; Scotland differs. Pension contributions, benefits in kind and other dividends aren't included.