What do I actually take home as a director?
Salary and dividends are taxed completely differently. Put in what you pay yourself and see what reaches your bank account, and what the optimal split would be. 2026/27 rates.
Your estimated take-home
Could you do better?
An estimate for 2026/27, rates checked 2026-11-10, for a single-director company in England. It excludes pension contributions, student loan repayments, benefits in kind, the High Income Child Benefit Charge, and Scottish rates. Dividends must come from distributable profits after Corporation Tax. We review this properly for clients every year.
Frequently asked questions
What is the most tax-efficient salary for a director?
For most single-director companies, a salary at the National Insurance secondary threshold of £5,000. It avoids employer and employee NI entirely. If your company has a second employee on the payroll you can use the Employment Allowance and a higher salary of £12,570 usually wins.
How much tax do I pay on dividends?
The first £500 is covered by the dividend allowance. Above that it is 8.75% at basic rate, 33.75% at higher rate and 39.35% at additional rate, on top of the Corporation Tax the company already paid.
Can I pay dividends if the company has no profit?
Only if there are accumulated realised profits from earlier years. Paying a dividend without distributable reserves is unlawful and HMRC will usually treat it as a director’s loan, which is expensive.
Does this include pension contributions?
No. Employer pension contributions are often the single most efficient way to extract profit. They are deductible for the company and attract no NI or income tax. Worth modelling separately, which we do for clients each year.
Why does my accountant change the split every year?
Because the thresholds move. A salary and dividend mix optimised two years ago is rarely optimal now, and almost nobody reviews it unless their accountant raises it.