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The best director salary for 2026-27, and how much dividend
Most directors of small companies take a small salary and the rest as dividends. Since April 2026 the basic rate of dividend tax is 10.75%, up from 8.75%, which tips the balance towards a salary of £12,570 for most people.
The figures for 2026-27
| Personal Allowance | £12,570 |
| Lower earnings limit (counts for State Pension) | £6,708 |
| Employer NI starts (secondary threshold) | £5,000, at 15% |
| Employee NI starts (primary threshold) | £12,570, at 8% |
| Employment Allowance | £10,500 |
| Dividend allowance | £500 |
| Dividend tax rates | 10.75%, 35.75%, 39.35% |
| Corporation Tax | 19% to 25% |
One-person company (no Employment Allowance)
If you're the only person on the payroll, the company can't claim Employment Allowance, so any salary above £5,000 costs 15% employer NI. Even so, a £12,570 salary usually comes out ahead, because the salary and the NI both save Corporation Tax and the salary itself is tax-free for you.
| Company profit | £5,000 salary | £6,708 salary | £12,570 salary |
|---|---|---|---|
| £30,000 | £23,941 | £24,045 | £24,403 |
| £60,000 | £45,294 | £45,530 | £46,091 |
| £100,000 | £64,457 | £64,627 | £65,210 |
| £150,000 | £85,321 | £85,273 | £85,110 |
What you keep after employer NI, Corporation Tax, your NI and Income Tax, taking all remaining profit as dividends in the same year. England, Wales and Northern Ireland rates.
At very high profits the dividends push into the higher and additional rates and the personal allowance starts to go, so the lower £5,000 salary edges ahead.
Companies that can claim Employment Allowance
If the company has other employees, Employment Allowance can wipe out the employer NI on a director's salary. Then £12,570 is better still, and at higher profits a bigger salary can beat dividends: salary taxed at 40% plus 2% NI can cost less than Corporation Tax at up to 26.5% followed by 35.75% dividend tax. Our calculator finds the exact point for your figures.
Things to check
- Salary must be run through payroll, with an FPS sent to HMRC on or before each payday.
- Dividends can only be paid out of retained profits after Corporation Tax. Keep a board minute and a dividend voucher for each one.
- A salary of at least £6,708 gives you a qualifying year for the State Pension.
- Scottish taxpayers pay different rates on salary above £12,570. Dividends are taxed at the UK rates.
- Employer pension contributions are another tax-efficient way to take money out, with no NI and Corporation Tax relief.
Work out your own split. Enter your company's profit and see every option side by side.
Open the salary and dividend calculator