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Dividend vs Salary Calculator

Compare like-for-like owner-manager extraction, including company and personal tax.

Enter the same pre-tax company resource for both routes. Salary consumes gross pay and employer NIC; a dividend can only use profit left after Corporation Tax. This is a bounded planning estimate, not an optimal-salary recommendation.

Dividend vs Salary Calculator

Compare the same pre-tax company resource as additional director salary or a post-Corporation-Tax dividend in 2025/26 or 2026/27.

Director's tax region

Supported: 1 April of the selected tax-year start. Choose the calendar date. Your browser controls the date order; for example, 26 September 2026.

Supported: 31 March of the next calendar year. Choose the calendar date. Your browser controls the date order; for example, 26 September 2026.

Standard trading profit after existing costs, but before this additional salary or dividend. Do not enter cash balance.

The same incremental company resource is held constant in both routes; cannot exceed profit above.

Use the count relevant to Corporation Tax threshold scaling.

Enter 0 if none. This is for augmented profits, not the proposed dividend paid to the director.

Before this additional extraction. Used for director annual NIC and personal Income Tax.

For example pension income. Other employment, savings and specialist reliefs require review.

Company eligible to apply Employment Allowance to this director's employer NIC?

A company with only one employee liable for employer NIC who is also its director is normally not eligible.

Enter 0 if ineligible. If eligible, use the actual remaining amount after other payroll; maximum £10,500.

Company has legally distributable profits and cash for the dividend route?
Standard full-year Category A director and UK non-ring-fence company, with no specialist reliefs?

What is held constant

The comparison holds an incremental amount of company taxable profit/resource constant. Other company profit and the director's existing personal income are unchanged between routes.

For salary, the resource buys gross salary plus incremental employer NIC after any confirmed unused Employment Allowance. For a dividend, incremental Corporation Tax is charged first. The remaining post-tax amount can be distributed only if lawful reserves and cash are available.

The result shows incremental director cash and tax/NIC costs against the same baseline; it does not compare two arbitrary gross payments of equal headline size.

Rule summary

2025/26 and 2026/27 standard-case mechanics

A full-year Category A director uses annual Class 1 NIC thresholds. Employee NIC is 8% between £12,570 and £50,270 and 2% above; employer NIC is 15% above £5,000. An eligible employer may use up to £10,500 Employment Allowance, but a single-director company with no other employee liable for employer NIC is usually excluded. Enter the actual unused allowance; do not infer eligibility from the form.

Normal deductible director remuneration and employer NIC reduce company taxable profit. A dividend is a distribution of post-Corporation-Tax profit, not a deductible company salary expense. The linked Corporation Tax marginal-relief model handles 19% / 25% rates, 3/200 relief, augmented profits and associated-company limits for the stated period.

For England, Wales and Northern Ireland, personal Income Tax uses the standard £12,570 Personal Allowance (tapering above £100,000), 20% / 40% / 45% non-savings bands, and the selected year's dividend rates with a £500 nil-rate dividend allowance. Existing income consumes bands and can change the marginal result.

MeasureSalary routeDividend route
Company sideGross salary plus employer NIC, with Employment Allowance where confirmedIncremental Corporation Tax first; only post-tax profit may be distributed
Director sideIncome Tax plus annual employee Class 1 NICDividend tax after Personal and Dividend Allowances
ComparisonIncremental net cash from the same company resourceIncremental net cash from the same company resource

Worked examples

How the result behaves in practice

Salary can win with unused Personal Allowance

2026/27; £60,000 company profit including £10,000 resource; no existing personal income or Employment Allowance; no associated companies or qualifying distributions.

The £50,000 baseline bears £9,500 Corporation Tax. Dividend-route profit of £60,000 bears £12,150, so only £7,350 is distributable from the resource. The salary route pays £9,347.83 gross plus £652.17 employer NIC, with no employee NIC or Income Tax. Salary leaves £1,997.83 more net cash in this specific case.

Other income and Employment Allowance change the answer

If the director already uses Personal Allowance and the company has confirmed unused Employment Allowance, rerun with those facts instead of reusing the first result.

Salary Income Tax, director NIC, dividend tax and company Corporation Tax can then move differently. Neither route is universally better.

Turn the result into an action plan

Confirm Employment Allowance eligibility and actual unused balance; single-director companies are commonly ineligible.

Check the chosen tax year, full 1 April–31 March company period, actual taxable profits, associated companies and qualifying distributions.

Confirm legal distributable reserves and cash, remuneration deductibility, and wider personal circumstances before acting. Use the linked Dividend Tax and Marginal Relief tools for the component calculations.

Read the guide

Dividend vs salary

Read the supported rule, assumptions and worked examples behind this tool.

Assumptions and limits

This tool gives a practical estimate and depends on the assumptions shown below.

Assumptions

  • UK-resident individual director/shareholder taxed in England, Wales or Northern Ireland; full-year Category A directorship and no other employment for NIC aggregation.
  • Standard UK-resident non-ring-fence trading company; 1 April–31 March accounting period matching the personal tax-year start, with proposed salary paid between 6 April and 31 March; resource is incremental taxable trading profit within entered total profit.
  • Entered existing director salary is the only employment income; other non-savings income excludes it. Adjusted net income equals the gross income entered; no savings, band extensions or specialist reliefs.
  • Confirmed Employment Allowance eligibility and unused amount are supplied by the user. The company has legally distributable post-tax profits and cash for the dividend route.

Limits and rule basis

  • Scottish salary-tax cases, partial-year directorships, other employments, alternative NIC categories, pensions, salary sacrifice, benefits, student loans, child-benefit charge, non-residence and specialist tax reliefs require professional review.
  • Short or cross-1-April company periods, losses, group relief, disputed remuneration deductibility, complex distributions and companies outside the standard Corporation Tax regime are unsupported.
  • This is incremental extraction planning, not payroll, a filed Corporation Tax computation, dividend-law advice or a universal optimal-pay recommendation. Rules reviewed 25 September 2026.

Primary sources and review date

Reviewed on . Preserved source review from the accepted scoped statutory repair; this contract migration does not re-date that review.

Applies to: Tax years 2025/26 and 2026/27; equal pre-tax company resource, director NIC and supported Corporation Tax assumptions.

Reviewed scope: UK resident taxed in England/Wales/Northern Ireland, full-year Category A director, no other employment for NIC aggregation; not an optimal-salary recommendation.

Review basis and change triggers

Reviewed model: dividend-vs-salary-calculator: standard-extraction-2025-26-to-2026-27-reviewed-25 September 2026

  • A cited source or statutory regime changes.
  • Reviewed content, runtime adapter or domain implementation changes.
  • A new effective period falls outside the supported scope.