UK Salary vs Dividends Calculator
Compare how much personal take-home the same amount of company profit could produce as additional salary or dividends.
LedgerKit provides estimates based on the information entered and the configured rates. Results do not constitute accounting, tax or legal advice. Check the latest official guidance or consult a qualified professional before acting on a calculation.
How this calculator works
Start with company profit before the payment being compared. The salary route finds the gross salary and employer National Insurance that use that amount. The dividend route first calculates the extra Corporation Tax, then treats the remaining profit as the available dividend.
The calculator measures personal Income Tax against the tax on your existing salary, other non-savings income and dividends. It recalculates the Personal Allowance and tax bands for each route. Employee National Insurance uses the annual method for a full-year Category A director.
Enter only Employment Allowance that the company is eligible to claim and expects to have unused. The annual allowance is £10,500, but a company where the sole director is the only employee liable for employer National Insurance cannot claim it.
Corporation Tax is calculated as the increase above the other taxable company profits entered. This includes the small profits rate, main rate and Marginal Relief for a full 12-month accounting period, with the associated companies and relevant distributions entered under more company tax details.
This comparison does not optimise a salary-and-dividend mix. It excludes savings income, benefits, student loans, the High Income Child Benefit Charge, pension and Gift Aid band extensions, specialist allowances, IR35 and director appointments part-way through the year.
Worked example
For 2026/27, £10,000 of company profit, £12,570 company salary for the full tax year before this payment, no other income or dividends, no unused Employment Allowance, no other company profits, no relevant distributions and no associated companies gives £8,695.65 gross extra salary and £1,304.35 employer NI. After £1,739.13 additional Income Tax and £695.65 employee NI, salary take-home is £6,260.87. The dividend route leaves £8,100 after £1,900 Corporation Tax; after £817 additional Income Tax, dividend take-home is £7,283. Dividends leave £1,022.13 more in this example.
Frequently asked questions
Why compare the same company profit instead of the same gross payment?
The same gross salary and dividend do not cost the company the same amount. Salary can create employer National Insurance and normally reduces taxable profit; dividends do not reduce Corporation Tax.
Does salary always reduce Corporation Tax?
Normal employee and director remuneration is usually deductible when incurred for the trade, subject to timing and other rules. This calculator assumes the company can use that relief in the relevant period.
Can my company claim Employment Allowance?
Eligible employers can reduce employer National Insurance by up to £10,500. A limited company cannot claim where its sole director is the only employee liable for employer National Insurance. Any allowance may also be shared across the company payroll.
Are Scottish dividends taxed at Scottish rates?
No. Scottish rates apply to non-savings income such as salary. UK rates and bands apply to dividends.
Can the company always pay the calculated dividend?
No. It must have enough available distributable profits from current or previous financial years and follow the legal process for declaring and recording a dividend.
Does this find the best salary-and-dividend mix?
No. It compares two additional-payment routes using the same company profit. It does not recommend or optimise a remuneration plan.