← Free tools & calculators
Free tool
Dividend vs salary calculator UK 2025/26
Find the most tax-efficient split between salary and dividends for UK company directors. Enter your salary and dividends to see your income tax, National Insurance, dividend tax and take-home pay.
£
£
Your estimated tax breakdown
- Total income
- £62,570
- Personal allowance
- -£12,570
- Taxable income
- £50,000
- Income tax
- £0
- National Insurance (Class 1)
- £0
- Dividend allowance
- -£500
- Dividend tax
- £7,281
- Total tax & NI
- £7,281
- Estimated take-home
- £55,289
- Effective tax rate
- 11.6%
This calculator provides estimates based on 2025/26 UK tax rates. It does not account for pension contributions, Employment Allowance, or company Corporation Tax. Confirm your position with a qualified accountant.
Dividend vs salary UK — frequently asked questions
- What is the most tax-efficient salary for a director in 2025/26?
- Most directors set their salary at the Secondary NI threshold (£5,000 in 2025/26) or the Primary NI threshold (£12,570). Salary at £12,570 uses the full personal allowance tax-free, but triggers employee NI above £12,570. Salary at £5,000 avoids employer NI (unless you have Employment Allowance) and employee NI. The optimal level depends on whether your company claims Employment Allowance.
- What is the dividend allowance in 2025/26?
- The dividend allowance is £500 in 2025/26 (reduced from £1,000 in 2023/24 and £2,000 previously). The first £500 of dividend income is tax-free each year. Above that, dividends are taxed at 8.75% (basic rate), 33.75% (higher rate) or 39.35% (additional rate), depending on your total income.
- Do dividends attract National Insurance?
- No. Dividends are not subject to National Insurance — either employee's or employer's NI. This is one of the key tax advantages of taking income as dividends rather than salary above the NI threshold.
- How does Corporation Tax affect the comparison?
- The salary and dividend calculator above shows personal tax only. Remember that salaries are a deductible business expense (reducing Corporation Tax), while dividends are paid from post-tax profits. The true optimal split requires modelling both personal and company tax together. A qualified accountant can help with a full analysis.
- Does Finovo help with director salary and dividend planning?
- Finovo tracks both salary payments and dividend declarations in one workspace. Your accountant can review your running position at any time to optimise the salary/dividend split for the year. Finovo also calculates Corporation Tax, files MTD VAT returns and handles payroll — all in one subscription.