UK Ltd · Tax year 2026/27 · Free tool

Salary vs Dividend Calculator for one-person Ltd companies

The cleanest way to take money out of your limited company is almost always a small salary plus dividends — but the *exact* split changes the tax bill by hundreds, sometimes thousands of pounds. Punch in your company profit and see all three of the standard strategies side by side, with real 2026/27 numbers.

Your company profit for the year, before director pay

Typical one-person consultancy: £40,000–£120,000. We'll assume no other taxable income and a single director with no other employees (so no Employment Allowance).

For guidance, not personal tax advice. Your actual position depends on other income, pension contributions, dividend timing and any reliefs you qualify for. Send us your situation in a one-minute form and we'll reply within one business day — no phone calls required.

Email me my personalised analysis

We'll send you a clean PDF of the figures above plus a one-page director-pay plan for the year — reviewed personally by Stuart Wilson, ACMA CGMA.

How a one-person Ltd actually saves tax

Limited-company directors usually pay themselves a small salary and take the rest as dividends. Three reasons that combination tends to win:

Salary reduces your company's corporation-tax bill (it's a deductible expense), but if you push it too high, employer National Insurance bites at 15% above £5,000.
Dividends are paid from post-tax profit, so they attract corporation tax inside the company first, then dividend tax on you personally — but no NIC at all.
Each tax-year contains a £500 dividend allowance and your full £12,570 Personal Allowance covers either salary or dividends — so the goal is to use both efficiently.

The optimisation is which exact salary level gets you the most net take-home and credits a State Pension year (£6,500 salary is the standard answer for that).

2026/27 tax facts this calculator uses

Personal Allowance · £12,570 (frozen)
Basic-rate band · £12,571 – £50,270 (20% income tax)
Higher-rate band · £50,271 – £125,140 (40%)
Additional rate · above £125,140 (45%)
Dividend allowance · £500
Dividend tax · 8.75% / 33.75% / 39.35%
Employer NIC · 15% above £5,000 secondary threshold
Employee NIC · 8% (£12,571 – £50,270), 2% above
Corporation Tax · 19% up to £50k profit, marginal relief £50k – £250k, 25% above

Common questions

How does this calculator work?

It takes your expected company profit (before director pay) and runs three common director-comp strategies side-by-side using UK 2026/27 tax rates — minimum salary (£5,000), state-pension-credit salary (£6,500), and full personal-allowance salary (£12,570). For each strategy it works out employer NIC, corporation tax (with marginal relief in the £50k–£250k band), employee NIC, income tax, and dividend tax, then shows your net take-home for each. The optimal strategy is highlighted.

Why three salary levels and not one ‘optimal’ answer?

Because the right answer depends on whether you also want to credit a qualifying year toward your State Pension. The £5,000 salary minimises tax. The £6,500 salary credits a State Pension year. The £12,570 salary uses your full Personal Allowance. The maths shifts depending on which trade-off matters most to you — the calculator shows you all three.

Does this account for Employment Allowance?

No — a single-director limited company with no other employees has not been eligible for Employment Allowance since 2016. If you have other paid employees, your figures will differ; speak to your accountant for that case.

Is this tax advice?

No — this is guidance, not personal advice. UK tax depends on your full circumstances, including other income, pension contributions, dividend timing and any reliefs you qualify for. Use the calculator as a starting point, then book a call to talk through your specific situation.

Which tax year do these figures use?

UK tax year 2026/27 (6 April 2026 to 5 April 2027). Income-tax thresholds and Personal Allowance are frozen at 2024/25 levels. Employer NIC is 15% above the £5,000 secondary threshold (April 2025 onwards). Dividend allowance is £500. Corporation tax is 19% up to £50,000 profit, marginal relief £50,001–£250,000, and 25% above.

Want it just handled?

We run UK limited-company finance and accounts at fixed prices — confirmation statement, micro-entity year-end accounts, MTD VAT, payroll, self-assessment and monthly bookkeeping. All by an ACMA CGMA chartered management accountant. No hourly surprises.

See UK Ltd services → Send your details