How paying yourself from a limited company is taxed
- Salary is a business expense. The company pays 15% employer NI on salary above £5,000 a year (unless the Employment Allowance covers it). You pay income tax above your personal allowance and 8% employee NI above £12,570.
- Corporation tax is charged on what is left: 19% up to £50,000 of profit, 25% above £250,000, with marginal relief in between.
- Dividends are paid from profit after corporation tax. They use any personal allowance your salary has not used, then the £500 dividend allowance, then 10.75%, 35.75% or 39.35%.
£60,000 profit, £12,570 salary, all profit paid out as dividends, no Employment Allowance
Your take-home£46,091£12,570 salary + £37,499 dividends
- Total tax and NI
- £13,90923.2% of profit
- Best salary for this profit
- £12,570your salary is already optimal
In the company
- Profit before your salary
- £60,000.00
- Your salary
- −£12,570.00
- Employer NI (15% above £5,000)
- −£1,135.50
- Taxable profit
- £46,294.50
- Corporation tax19% small profits rate
- −£8,795.96
- Profit available for dividends
- £37,498.54
For you
- Salary
- £12,570.00
- Income tax on salary
- £0.00
- Employee NI
- £0.00
- Dividends
- £37,498.54
- Dividend tax
- −£3,977.34
- Take-home
- £46,091.20
Best salary by profit (2026/27)
Single director, no Employment Allowance, no other income, all profit paid out in the tax year.
| Company profit | Best salary | Take-home | Take-home with £5,000 salary |
|---|---|---|---|
| £30,000 | £12,570 | £24,403 | £23,941 |
| £40,000 | £12,570 | £31,633 | £31,170 |
| £50,000 | £12,570 | £38,862 | £38,399 |
| £60,000 | £12,570 | £46,091 | £45,294 |
| £80,000 | £12,570 | £55,765 | £55,012 |
| £100,000 | £12,570 | £65,210 | £64,457 |
| £150,000 | £5,000 | £85,321 | £85,321 |
The gap between a £5,000 and a £12,570 salary is a few hundred pounds a year. A salary of at least £6,708 also protects your State Pension record.
What this calculator leaves out
It assumes one shareholder, no other income, no pension contributions and dividends taken in the same tax year as the profit. Employer pension contributions are deductible for corporation tax and free of NI, so they can beat both salary and dividends. Taking out more than the company’s distributable profits, director’s loans and IR35 are not modelled; for contracts inside IR35 use the IR35 calculator.