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Dividend Tax & Salary Split Calculator

Work out tax on your dividends at the 2026/27 rates, or find the salary and dividend mix that leaves a company director with the most after every tax.

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Scottish rates apply to salary only — dividends use UK rates everywhere.

£

Turnover minus business costs, before paying yourself.

£

£55,765

Most you can take home: £12,570 salary + £52,476 dividends · 30.3% total tax

Compare the options

OptionCorp. taxNI (both)Income + div. taxYou keep
All dividends (£0 salary)£17,450£0£8,389£54,161
£5,000 salary£16,125£0£8,863£55,012
£12,570 salary£13,818£1,136£9,282£55,765
All salary£0£13,198£15,519£51,283

How the best option works

Company profit£80,000
Your salary− £12,570
Employer's National Insurance− £1,136
Corporation Tax− £13,818
Paid to you as dividends£52,476
Your income tax on salary− £0
Your National Insurance− £0
Dividend tax (first £500 tax-free)− £9,282
You keep£55,765

Estimate only

Assumes a 12-month accounting period, no associated companies, all post-tax profit paid out as dividends, and no other income. Salary is usually worth keeping at least at the level that earns a National Insurance qualifying year for the State Pension. Dividends can only be paid from retained profits. Not tax advice — an accountant can also look at pension contributions, which often beat both.

Sources: HMRC dividend tax rates, Corporation Tax marginal relief, employer NI rates 2026/27.

How to use

Choose Salary vs dividends if you run a limited company and want the best way to pay yourself: enter the company's profit before your salary, and the calculator compares the usual options — no salary, £5,000, £12,570, all salary — with the best mix it can find. Choose Tax on my dividends if you just want to know the tax on dividends you received from shares or a company.

Dividend tax rates for 2026/27

  • Dividend allowance: the first £500 is taxed at 0%.
  • Basic rate: 10.75% (was 8.75% in 2025/26).
  • Higher rate: 35.75% (was 33.75%).
  • Additional rate: 39.35% (unchanged).

Which rate applies depends on where the dividends land once your other income has been counted. Salary, pension and rental income go first and use up your Personal Allowance and band space; dividends are stacked on top. That's why two people with the same dividend can pay very different tax on it.

Worked example: a director with £60,000 profit

A one-person company makes £60,000 before paying its director, who has no other income and lives in England. Two common approaches:

  • No salary: Corporation Tax of £12,150 leaves £47,850 to pay out. Dividend tax on that is £3,739, so the director keeps £44,111.
  • £12,570 salary: employer NI of £1,136, then Corporation Tax of £8,796 on the smaller profit, leaving £37,499 of dividends taxed at £3,977. The director keeps £46,091.

The salary route comes out £1,980 ahead, even though it creates an NI bill, because the salary and the NI both reduce Corporation Tax — and the salary itself is covered by the Personal Allowance, so there's no income tax or employee NI on it.

Why the answer changes with profit

Between £50,000 and £250,000 of profit, Corporation Tax marginal relief means each extra pound of profit costs 26.5% — more than the 25% main rate. Salary saves Corporation Tax at that marginal rate, so the case for a salary strengthens in that band. At the other end, once your dividends reach the higher-rate band the 35.75% rate makes each extra pound expensive either way, and leaving profit in the company or paying it into a pension becomes the better question.

Things this doesn't cover

  • Employer pension contributions — often the most efficient extraction of all.
  • Associated companies and short accounting periods, which reduce the CT limits.
  • Savings interest and the starting rate for savings.
  • Director's loans, benefits in kind, and IR35.

For your take-home on a salary alone, use the salary calculator; for tax on selling shares rather than their dividends, the Capital Gains Tax calculator.

Frequently asked questions

What are the dividend tax rates for 2026/27?

10.75% in the basic-rate band, 35.75% in the higher-rate band and 39.35% for additional-rate taxpayers. The first £500 of dividends each year is taxed at 0% (the dividend allowance). The basic and higher rates both rose by two percentage points from April 2026; the additional rate didn't change.

How is dividend tax worked out?

Dividends are treated as the top slice of your income. Your Personal Allowance and the tax bands are used by salary and other income first; dividends then fill what's left. GOV.UK's own example: £29,570 of wages and £3,000 of dividends. The wages use the £12,570 allowance, leaving £17,000 taxed at 20% (£3,400). The first £500 of dividends is covered by the allowance, and the other £2,500 is taxed at 10.75% — £268.75.

Does the £500 dividend allowance extend my basic-rate band?

No — and this is the most common mistake. Dividends covered by the allowance are taxed at 0% but still use up band space. If your salary leaves only £300 of basic-rate band, a £500 dividend covered by the allowance uses that £300 and pushes the next dividend straight into the higher rate.

What's the most tax-efficient salary for a company director?

It depends on profit and whether the company can claim the Employment Allowance. On £60,000 of profit, with no Employment Allowance, a £0 salary leaves you £44,111, a £12,570 salary leaves £46,091, and the best salary the calculator finds (£12,570) leaves £46,091. A salary at the Personal Allowance usually wins because it is deductible for Corporation Tax and carries no income tax or employee NI, while also earning a year towards the State Pension.

Why not take everything as salary?

Salary costs the company 15% employer NI above £5,000, and costs you 8% employee NI plus income tax. Dividends carry no NI at all. Paying profit out as dividends means Corporation Tax first, then dividend tax — which is usually cheaper overall than NI on both sides plus income tax, though the gap narrowed when dividend rates rose in 2026.

How much Corporation Tax does my company pay?

19% on profits up to £50,000, 25% above £250,000, and in between the main rate less marginal relief — an effective 26.5% on each pound between the two limits. The limits are shared between associated companies and cut for short accounting periods; this calculator assumes one company and a full year.

Do I pay tax on dividends in an ISA or pension?

No. Dividends from shares held in an ISA or a pension are tax-free and don't use your dividend allowance. Only dividends from shares held directly (or in a general investment account) count.

When do I have to tell HMRC about dividends?

If your dividends are more than £10,000, you must complete a Self Assessment tax return. Between £500 and £10,000 you can either ask HMRC to change your tax code or report them on a return if you already file one.

Is what I type sent anywhere?

No. The calculation runs in your browser; nothing you enter leaves your device.

Not financial advice

This tool provides estimates for general information only and is not financial, tax, or legal advice. Figures may not reflect the latest rules — verify with HMRC, Scottish Government, MHCLG, Revenue Scotland and Welsh Revenue Authority before making decisions.
  • Everything you type or open here is processed by your own browser. It is not sent to us and we could not read it if we wanted to.
  • Formatted for United Kingdom (en-GB), in GBP.

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