Answers · UK 2025/26
Should I take salary or dividends as a UK limited company director?
Most director-shareholders take a small salary up to £12,570 (Personal Allowance covers it, NI-free), then dividends for the rest. Total tax is typically 25-35% lower than full salary.
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UK director-shareholder remuneration optimisation 2025/26. Salary £12,570 = full Personal Allowance, above £6,396 LEL (preserves State Pension credits), below Primary Threshold (no employee NI). Employer NI: 15% × (£12,570 − £5,000) = £1,136 (deductible from CT). Employment Allowance £10,500 may offset (sole-director companies usually excluded). Dividends: from post-CT profits. CT 19-25%. Dividend tax: £500 free, then 8.75%/33.75%/39.35%. Example £100k profit: salary £12,570 → distributable after CT ~£70k → dividend tax ~£14,290 → net to director ~£68k. Sole trader on £100k: ~£68.5k. Limited-company benefit grows above ~£40k profit and with Employment Allowance.
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This answer is informational only and does not constitute financial, tax or legal advice. Figures are for the 2025/26 UK tax year. See our methodology and sources.