Dividend vs Salary Optimiser
How much salary should you take from your limited company? This tool tests hundreds of salary levels and finds the split that minimises your total tax bill.
Tax year 2026/27· Updated with current HMRC rates
Your company details
Enter your company's profit before salary extraction. Results update instantly.
Revenue minus expenses, before director salary
Employment, rental, etc. (affects tax bands)
% of profit contributed as employer pension
Optimal salary/dividend split
Director salary
£12,570/year
£1,048/month
Dividends
£37,499/year
£3,125/month
Total take-home
£46,091/year
23.2% effective tax rate
A salary of £12,570 uses your personal allowance (no income tax on salary) while keeping employer NICs relatively low. The rest comes as dividends taxed at lower rates.
How salary level affects your take-home
Each bar shows your total take-home pay (salary + dividends minus all taxes) at a different salary level.
Take-home by salary level
Green bar = optimal salary. Hover for details.
Full tax breakdown at optimal split
Compare common strategies
| Strategy | Salary | Dividends | Total tax | Take-home |
|---|---|---|---|---|
| No salary | £0 | £47,850 | £15,889 | £44,111 |
| £12,570 (personal allowance) | £12,570 | £37,499 | £13,909 | £46,091 |
| £50,270 (higher rate) | £50,270 | £2,381 | £18,577 | £41,423 |
Save your results
Email yourself a copy of these calculations to refer back to later.
How this works
- Tests hundreds of salary levels from £0 to your gross profit and finds the split that maximises take-home pay.
- Accounts for: income tax, employee and employer NICs, corporation tax (with marginal relief), dividend tax, and student loan repayments.
- No employment allowance (single-director company). Employment allowance is only available if you have other employees.
- Assumes all post-tax profit is extracted as dividends. Retaining profit in the company defers tax but doesn't eliminate it.
- Based on HMRC 2026/27 rates. Always verify with your accountant.
Understanding the salary/dividend split
As a limited company director, you have flexibility in how you extract profits. The main options are salary (subject to income tax and NICs) and dividends (subject to corporation tax and dividend tax, but no NICs). The optimal mix depends on your profit level.
Why £12,570 is usually optimal
At £12,570, your salary exactly matches the personal allowance — meaning zero income tax on salary. Employer NICs apply above £5,000, but the cost (around £1,045/year) is offset by the tax-free allowance. Everything above £12,570 is better extracted as dividends because dividend tax rates (10.75% basic) are lower than the combined income tax + NICs on additional salary.
When the optimal salary differs
- If you have other income (e.g., part-time employment), your personal allowance may already be used — reducing the benefit of salary
- At very high profits (above £100,000), the personal allowance taper complicates things
- If you're on a student loan, salary vs dividend affects repayment calculations
- If you want to maximise state pension credits, you need salary above the NI lower earnings limit
Tax planning is individual. This tool provides a starting point — always discuss your specific situation with a qualified accountant before making changes to your salary/dividend strategy.