Salary vs Dividend Calculator 2026/27
Optimise your salary and dividend split for tax efficiency
Income Tax Bands
Dividend Tax Rates
What is the most tax-efficient salary/dividend split?
For 2026/27, taking a salary up to the Personal Allowance (£12,570) and the rest as dividends is typically most tax-efficient. This avoids income tax on salary while minimizing National Insurance.
Why take a salary at all if dividends are taxed less?
Taking at least £12,570 salary protects your State Pension record (you need to earn above £6,725 to qualify for a full year). It's also a deductible expense for Corporation Tax.
What is the dividend allowance for 2026/27?
The dividend allowance is £500 for 2026/27. This means the first £500 of dividends you receive is tax-free, regardless of your tax band.
What are the dividend tax rates for 2026/27?
Dividend tax rates are: 8.75% for basic rate taxpayers, 33.75% for higher rate taxpayers (£50,270-£125,140), and 39.35% for additional rate taxpayers (over £125,140).
Should I leave money in the company?
Leaving profits in the company means only paying Corporation Tax (19%). You'll pay dividend tax when you extract it later. This can be tax-efficient if you don't need all the money now or want to invest for growth.
1. Take salary up to £12,570 to use your Personal Allowance
2. Use your £500 dividend allowance
3. Consider pension contributions for higher earners
4. Leave profits in company if you don't need them now