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    Salary vs Dividend Calculator for UK Company Directors

    Compare the tax and take-home pay from salary versus dividends for UK limited company directors.

    Use this calculator to compare your take-home pay when extracting money as salary or dividends. This tool focuses on immediate tax costs only — it does not include pensions, employer contributions, or wider financial planning.

    Updated December 2025

    What This Calculator Does

    This calculator compares director salary and dividend income to help evaluate tax efficiency under current UK rules.

    Compares take-home pay when extracting money as salary or dividends

    Does not include pension contributions, employer NI savings from salary sacrifice, or long-term tax planning

    Focused comparison to help you understand the immediate tax cost of each option

    Your Numbers

    Enter the amount you want to extract and your current income

    How much company money are you deciding how to take?

    Include salary already taken to determine your tax bracket

    Your Comparison

    Based on your tax position

    Salary lets you keep more

    Salary allows you to keep £723 more in this comparison

    As Salary
    Gross salary:£18,678
    Employer NI (13.8%):-£1,322
    Income Tax:-£3,736
    Employee NI (8%/2%):-£489
    You keep:£14,454
    As Dividend
    Company profit:£20,000
    Corporation Tax (25%):-£5,000
    Dividend paid:£15,000
    Dividend Tax:-£1,269
    You keep:£13,731

    This is a focused comparison

    This calculator compares only salary vs dividends for the amount you entered. It does not factor in:

    • Pension contributions and tax relief
    • Optimal salary up to the NI threshold (£12,570)
    • Personal Allowance restoration for £100k+ earners
    • Carry-forward pension allowance
    Build a more robust retirement plan

    Save to Your Financial Plan

    Your saved details will pre-fill other calculators automatically so you do not have to re-key information and can access your saved calculations at any time.

    How Salary vs Dividend Works

    As a UK company director, you have two main ways to extract money from your company: salary or dividends. Each has different tax implications.

    Salary: The company pays employer National Insurance (13.8% above £9,100). You then pay income tax and employee NI on what you receive. Salary is a business expense, reducing corporation tax.

    Dividends: The company pays 25% corporation tax on profits first. The remaining profit can be paid as dividends. You pay dividend tax on what you receive (0% on first £500, then 8.75%, 33.75%, or 39.35% depending on your tax band).

    Which is better? For lower incomes, salary up to the NI threshold (£12,570) is usually best. Beyond that, dividends often win because combined CT + dividend tax is less than income tax + NI. But it depends on your specific numbers.

    What's Next?

    Director's Income Planning Guide

    15 min read read

    Deep-dive into salary, dividend, and pension strategies for company directors

    Read Guide
    MR

    About the author

    Melanie Reed is a fintech and product specialist with 13+ years' experience building mortgage, investment, savings and retirement tools at companies including Aviva, Lendinvest, Money Advice Trust and Luno. She develops calculators and content that simplify complex UK financial decisions, covering pensions, mortgages, tax-efficiency and long-term savings.

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